In the last section, you read about the power of diversification and why its even more important for a trader or self-directed trader to diversify the securities they trade. You also learned why ETF's are uniquely qualified to deliver this type of diversification but also in a very expanded way because you can spread out your risk globally and across different sectors. Next time you read of a bad earnings report on a stock that is hot in the news take a look at its chart and you'll see a stock that drops like it was shot between the eyes. The volatility in the price action stock goes off the charts which can play hell with your trade equity. The nice thing about the ETF's though are that if its trending and one of the stocks releases a bad earnings report then it can shrug it off. As a result, it can keep on trending unless all the other stocks have bad earnings too. And, even if it does, you can exploit the ETF's volatility using a volatility options strategy (which we'll get into later). The reason for this is that all the bad news is quickly digested by the market and then spread out over the other stocks that make up the structure of the ETF. There may be a reaction like a dip or pullback but unless there is catastrophic bad news in the whole sector then the potential is there for the ETF to resumre its initial trend. While ETF's may not have as large a price swing as a Google or Baid.com when they are on a bull run, ETF's will offter you a smoother equity curve on your trade equity while sparing you the coronary if bad news hits the market.