Stock Index CFDs – No swaps and 1:400 high leverage
Choose from the world’s most popular indices, including the FTSE 100, S&P 500, Dow Jones Industrial Average and many others.
With Exness, you can trade AUS200, US30, FR40, DE30, USTEC, US500, STOXX50, UK100, HK50, and JP225.
- No Swaps
- No swap is charged on indices positions.
- Fixed margin
- When trading indices, leverage is fixed at 1:400 for US30, US500 and USTEC, and 1:200 for other indices.
Dow Jones, FTSE, DAX… these are the magic words you see every day in the news, their change in value creates a heart attack for investors and traders and makes monetary policymakers apply the changes to their economy. But have you ever thought that you can trade indices and increase your profit easily? Let’s find out how you can do it.
Definitions of the index
The equity index is a benchmark value, which calculates the price performance of the many (usually the largest) equities listed on a particular exchange. The value of the index is usually described in points. Each index is calculated differently, but generally it is the average value of the stock value of the entire stock exchange. Companies with large earnings have a large impact on the stock exchange value. Due to the natural composition of an index, it can reflect the health of the market or economy it represents. When you trade an index, you are not buying the asset you are trading. But you’re only trading based on price changes, just like you’re trading a currency pair. You predict the movement of the index value, open an order position, and see if its value goes up. If you are right, then you will get money.
Why choose an index over an individual stock?
The index provides an overview of the international market. When you trade indices, you will understand the condition of the companies and the stocks they represent. For example, when you trade the FTSE 100 index, you will have access to the movements of major British companies.
It will help you focus on the specific stocks that have an impact on the index value, compared to the difficulty of choosing from the available stocks.
Diversifikasi alami mengurangi potensi dari pergerakan harga yang tak terduga berdasarkan dari rilis berita yang tiba-tiba.When an index composition changes, so does capitalization, which affects the final value of an index. Therefore, it is necessary to track changes in index listings, follow financial statements and news for companies that issued those stocks.
Trading of Stock Index CFDs
There are various factors to consider when trading indices.
- First, learn which parts have an impact on the index. Does the equity of a composite index consist of one or more market sectors? The answers will help you focus on updates from specific sectors that might affect the value of the index.
- See the correlation between currencies and indices. Domestic indices tend to be correlated with the condition of a country’s currency. For example, the value of the American index will increase when the demand for the US dollar increases. The reason is external investment: traders invest in the American stock market, they need to buy US dollars first. This will cause the value of the US index to increase.
Find the correlation between a country’s domestic index and available commodities. For example, if a country is an oil exporter, its index value will increase when oil prices fall. If the country imports oil (Japan), then the index value tends to fall.
- Check for changes to the index list regularly. The stocks that make up the index may change as a result of market capitalization, stock combinations, or stock acquisitions. The most important companies usually have the largest capitalization value. The market capitalization of a company is the sum of all the values of the shares issued to the market. The index is affected by the value of the company’s shares. For example, if the company’s capitalization drops, its shares will be small to stay in the index. Therefore the company can replace it with another company that has a larger capitalization value. In addition, mergers and acquisitions (M&A) can change the value of stocks listed on the index.
- When the stock value of the index changes, the capitalization also changes which will affect the final value of the index. That is why it is important to keep abreast of changes in the stock list of the index, following financial statements and news for the company that issued the stock.
What index to choose for trading?
After taking the important step of choosing the indices to trade, you can then analyze their charts in the MT5 trading terminal. Exness gives you access to trade several well-known indices. Brazilian Stock Exchange Index (Indice Bovespa, IBOVESPA) – is a benchmark index consisting of approximately 60 stocks traded on the Brazilian Stock Exchange (B3, Bovespa: BOlsa de Valores do Estado de São Paulo). Stocks in the index account for 80% of the trading volume for 12 months and are traded approximately 80% daily. It is also an indicator of the state of the Brazilian economy, where many large companies are listed and stabilized there.
The Financial Times Stock Exchange 100 Index (the FTSE 100 Index, FTSE 100, FTSE, the “Footsie”) – is a stock index of the 100 companies listed on the London Stock Exchanges (LSE) with the largest market caps. They represent around 81% of all market capitalization in LSE. Many of these companies are international companies, but the index is considered an indicator of how the UK economy is performing. It is also very dependent on the value of the British pound.
The DAX (Deutscher Aktienindex (German stock index) – is a stock index consisting of 30 German trading companies on the Frankfurt Stock Exchange with the largest market capitalization.
The Dow Jones Industrial average index (DOW, DJ) – is a stock index of 30 large companies based in the United States. The name “industrial” has historical significance because most of the 30 companies that make up the index are not associated with heavy industry. Even though it comes from America, the value of this index does not only depend on data, but also on world news, political events, and natural disasters.
HS index (HSI) – is a benchmark capitalization-heavy index, which tracks the performance of the 50 largest companies on the Hong Kong stock exchange. It is used as a leading indicator to measure the conditions of the Hong Kong market. The stocks that make up the index must be able to create 90% of the total capitalization of all its shares and must have a 24-month history list that is eligible.
Despite having great value and representing the work of different sectors of the economy or economy, indices are easier to trade than they look. Then index trading also helps you in tracking the economic performance of different countries and take advantage of this knowledge when trading in currency pairs.