What is Indices?
Trading indices allows trading with the top markets in the financial branch, there is no need to analyze the stocks of certain companies. When the index changes with the time allowing not only realizing the direction of the price movement but even making a profit on the very processes by trading CFDs.
An index is a good method to diversify greatly the performance of individual portfolios, as it embellishes the trading portfolios.
Main Features of Indices trading
Capitalize on leverage
You need a margin to open a position on the market. Leverage can increase your profit greatly. The entire position size, not just the initial margin determines your success.
Go long or short
Going long means to buy, as you expect the price to rise, and going short is to sell, when the price falls. Your profit depends on the accuracy of your prediction.
Hedge your positions
With a short position on some individual stocks featuring on an index, hedge against the risk of any price increases with a long position on that index.
Use good volatility
Good volatility helps when trading. Indices are in the middle, between Forex and stocks. It is an excellent option for day trading.
Trading Indices using Contracts for Difference
US30
The US30 is most commonly known as the Dow Jones Industrial Average, ‘Dow’. This is the oldest index in the world and represents 30 blue-chip companies that are listed on the New York Stock Exchange.
FRA40
This is the largest index in Paris and tracks the FRench Cac40, also known as the Cac Quarante.
GER30
The GER30 Index is known as the DAX30 and is the leading index in Germany.
UK100
The UK100 tracks the FTSE100. This is the index which represents 100 UK companies that are listed on the London Stock Exchange.
AUS200
The AUS200 follows the ASX200, which tracks, the performance of 200 of the most valuable and liquid stocks within Australia.
EUSTX50
The EUSTX50 follows the Euro Stoxx 50, a stock market index that tracks the performance of the 50 top stocks by market cap in the Eurozone.
JPN225
The JPN225 CFD tracks the Nikkei 225, or simply the Nikkei. It is Japan’s headline stock market index and includes 225 leading Japanese companies.
SPX500
The SPX500 CFD tracks the S&P500, or simply the S&P, it’s one of the largest and most widely followed stock indices in the world.
NDX100
NDX100 includes the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. It includes companies from various industries except for the financial industry.
Comparing Index Trading
There are several methods you can use to trade Indices including, futures, options, ETFs, and CFDs. Futures and options require will require a trading account with a broker for each different exchange, futures also typically have large contract sizes.
ETFs (Exchange Traded Funds) are ideal for long-term investors. ETFs can be slightly complicated as they are shares themselves which then own all the shares in that particular index. They are used as a cost-effective method of owning all the index fund shares without buying each individual stock.
CFDs can be the most cost-effective and popular option amongst traders, as they can access multiple markets with only one trading account. CFDs also offer the option of opening long and short positions, unlike ETFs.
FAQs
What the Indices defenition?
Indices are the plural form of a term ” stock index”. A stock index measures the performance of a group of shares within a particular exchange. For example, the DAX represents the 30 blue-chip companies from the New York Stock Exchange. If the individual stocks from this index were to rise in price, then the price value of the DAX would also increase. The same would happen if the stocks were to fall, the DAX would also fall.
Advantages and Disadvantages of Trading indices
Advantages of trading Index CFDs
- Access multiple indices with only one trading account.
- Trade market action from around the world.
- Go long and short, and use leverage with small or large amounts of capital.
Disadvantages of trading Index CFDs
- Using leverage irresponsibly can lead to large losses.
- Index trading is competitive and requires time and commitment to become proficient.
Indices Trading Hours
All times are GMT+3
| Dow Jones Industrial Average (US30) | 00:00 – 24:00 (Monday open 01:00) |
| CAC 40 (FRA40) | 09:00-23:00 |
| German stock index DAX 30 (GER30) | 00:00-24:00 (Monday open 01:00) |
| FTSE 100 (UK100) | 00:00-24:00 (Monday open 01:00) |
| Euro Stoxx 50 Future (EUSTX50) | 00:00-24:00 (Monday open 01:00) |
| NASDAQ 100 (NDX100) | 00:00-24:00 (Monday open 01:00) |
| S&P/ASX 200 (ASX200) | 00:50-07:30, 08:10-23:00 |
| Nikkei 225 (JPN225) | 00:00-24:00 (Monday open 01:00) |
| Hang Seng (HSI) (HK50) | 00:00-24:00 (Monday open 01:00) |
| Standard & Poor’s 500 (SPX500) | 00:00-24:00 (Monday open 01:00) |
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