What is Indices Trading?
Indices are trading instruments, which consist of a group of bonds and show changes in their prices. For example, an index includes several stocks and its price is calculated based on the total cost of bonds or capitalization of issuers.
A set of bonds, which the index consists of, shows what information relating to the current economic climate may be received when analyzing it. Thanks to using indices in trading, traders have an opportunity to diversify their investment portfolio, collect and analyze information relating to the global economy, or one of its sectors.FXCore offers its clients access to some of the best conditions for trading Indices in the industry.
For example, the commission in DE30, one of the most important German indices, has been decreased down to 0.5 pips on ECN and Prime accounts, and 0.7 pips on Pro-Standard ones.
- Minimum deposit – 10 USD
- More than 10 trading instruments
- Exclusive trading conditions
Main perks of Indices trading?
With thousands of stocks trading across different exchanges, stock indices provide an accurate and reliable way to gauge the overall market sentiment. They can also act as benchmarks against individual stock portfolios.They can offer exposure to an entire sector in a country.
You do not have to perform thorough research on individual companies and other fundamentals. You can simply take a bullish or bearish position, depending on the overall market direction. They reduce the risk of a single company’s performance impacting your entire portfolio.Price movements of indices are smoother, since individual stock performances cannot lead to intense spikes in volatility.
But this volatility is sufficient for you to pick out numerous trading opportunities. There is a lot of activity that happens on individual stocks to produce ample index volatility. Indices trading can be suitable to traders of all styles and a variety of trading strategies, since indices reflect the broader effects of economic and political shifts.
- Trading CFD indices allows you to speculate on the direction of movement of the underlying index, without actually having physical ownership of any shares.
- When you trade indices you get to trade both bullish and bearish price moves, giving you greater trading opportunities.
- Costs are much lower, since you don’t actually own the asset.
- Competitive leverage means you can choose to increase your exposure with only a small investment from you.
- Remember, CFD indices are a leveraged product which mean that you can also magnify your losses.
- With powerful platforms like FXCore, PVPlatform and Iress, FXCore offers access to live streaming prices, cutting-edge technical analysis and charting tools as well as offering you consistently tight spreads, starting from as low as 0.0 pips.
Stock market indices give the measure of a specific stock market. They represent the value of a group of stocks from a country and the overall, current, and historic performance of a specific set of stocks. The calculated value of the stock index is used by investors as an indicator of the current value of their component stocks. Investors can find out the expected returns over time by comparing the current and historic index levels.
Every stock exchange in the world has a benchmark stock index, while some have several. These baskets of individual stocks are often ranked by independent institutions, like major banks or specialist companies like the FTSE Group or the Deutsche Börse. They also come in different sizes. For instance, the FTSE 100 tracks the share price of the top 100 companies listed on the London Stock Exchange, in terms of market capitalization. The ASX 200 tracks the share price of the 200 top companies listed on the Australian Securities Exchange (ASX), while the SPI 200 futures contract is a benchmark equity index futures contract, based on the ASX 200 index.
It is impossible to track all the companies listed on a stock exchange, which is why traders resort to index trading. Through trading indices, they are able to measure the overall performance of the stock market of the country and the economy in general. Traders speculate on the price movements of these financial instruments indices to earn returns when the indices rise in value.