Index trade on Xtrade
To make it easier to understand what the stock exchange index is, imagine a conditional basket in which the shares of leading companies operating in different sectors lie. And these shares are traded at a centralized stock exchange, for example, on NYSE (New York Stock Exchange), NASDAQ or LSE (London Stock Exchange). Traders engaged in the trade in indexes, there is a choice from many different options in America, Europe, Asia and Australia. On the platform in Xtrade, you will always find an optimal asset to conclude transactions in online mode.
Exchange indices are indicators of efficiency (capitalization) of groups of shares, companies and economies in general. The components of such an indicator are weighed in accordance with their significance in a particular index. To better understand the principles of trafficking by these derivatives, it is necessary to study the factors affecting the value of the shares included in the specific index.
Although each index is inextricably linked with the performance of its components, information about the behavior of major international Indicators can be useful for trade in indexes around the world. Thus, an understanding of the nuances of trading index FTSE 100 (a measure of the effectiveness of the 100 largest companies in the UK on market capitalization) will definitely help in trade by regional and national stock market indices in different developed countries.
Many traders are already familiar with the largest national indices of the stock market, such as: Canada (S & P / TSX Composite Index), South Korea (Kospi Index), Brazil (BOVESPA INDEX), FRANCE (CAC 40 Index), India (BSE SENSEX INDEX), Italy. (FTSE MIB index), Great Britain (FTSE 100 Index), Japan (Nikkei 225), Germany (DAX performance index) and China (SSE Composite Index).
The largest stock exchanges and indices in the world
US stock exchanges significantly exceed their competitors in the volume of bidding and index settings. In the TOP-10 stock exchanges on market capitalization in 2021 include:
New York Stock Exchange Index NASDAQ Composite Hong Kong Exchange Shanghai Stock Exchange Japanese Exchange Group Euronext Shenzhenskaya Stock Exchange LSE TMX Group Group National Stock Exchange India
Naturally, in the indices of these countries shares will be presented with the highest market capitalization, and such indicators cause maximum trading interest. It is important to distinguish between the stock exchange and the stock index. Stock Exchange is a centralized place where they buy and sell shares. The stock index is an indicator reflecting the general state and market efficiency or individual industries.
Brokerage Platform Xtrade covers all the largest market trading markets for index assets. These include the following indexes for specific countries:
Indexes of the USA on Xtrade
Index Russell 2000 Index NASDAQ Composite Index 30 Index of Dollar USA Index USA 55 US-Tech Index 100
Indexes of Europe on Xtrade
Index of Italy 40 Index of Germany 30 Index of Spain 35 UK 8 Index Russia 50
Asian indexes on Xtrade
Hong Kong index 50
Australia indexes on Xtrade
Australia index 200
How to trade indexes online?
Remote trade trade in indexes – an online purchase or sale of a specific indicator based on speculative assessment of the asset price behavior. So if you are set up “bullish” optimistic about the UK 100 index, you buy this indicator (open a long position). If you are configured “in bearings” in relation to the UK 100 index, you sell the index (open a short position). All indexes such as Russell 2000, Nasdaq, USA 30, US Dollar Index, USA 500, US-Tech 100 Index, have the current purchase and sale price. Open long or a short position depending on your market assessment. Right at this time on world stock exchanges are transactions with 5000+ American indices. The US stock market is oversaturated by indicators of an impressive volume of shares of various companies. Indices with the highest capitalization are considered the most traded assets. Such standards of macroeconomic indicators are powerful financial instruments that many traders include in their investment portfolio. As the most accurate “reflectors” stock markets, indices allow you to quickly assess the condition of the general economy or a specific industry.
Recall that the price of the index is determined by the average average values of the main values of the main components that are included in the index “basket”. What exactly does it mean? Take, for example, the NASDAQ index. This is more than 2500 shares climes on the NASDAQ Stock Exchange.
NASDAQ components by industry
48.39% – Technological companies 19.43% – Consumer services 10.21% – Healthcare 7.21% – Financial sector 6.85% – industrial enterprises 5.51% – consumer goods 0.81% – utilities 0.72% – telecommunication companies 0.55% – oil and gas sector 0.32% – production of basic materials
therefore If you want to trade the NASDAQ composite index, your attention should be focused on advanced technologies, consumer services and health care. The remaining components, although weighing, but are much less important to determine the price of the NASDAQ index. Your strategy It can be based on the assessment of the most significant shares included in the specific index. When Apple, Microsoft and Amazon are on the rise, then, most likely, the NASDAQ 100 index moves in the same direction, and vice versa.
Benefits of trade in indexes with CFD
contracts (CFD) contracts (CFD) are derived tools (derivatives), which are based on tracking the value of a specific asset. The price of the CFD contract on the index is determined by the value of the traded indicator. If your forecast is associated with increasing Index prices, it is necessary to open a long position. Conversely – any pessimism with respect to the selected asset dictates the need to open a short position. The resulting profit or loss is fully dependent on the correctness of the prediction made.
For understanding, we give the following example:
Suppose you have entered into a CFD contract for the NASDAQ 100 index with a long position opening. If the asset price rises by the time the transaction is closed, the cost of growth value determines your profits. Suppose you Trade the NASDAQ 100 index and open a short position. If the price by the time of closing the contract falls below the initial price, the amount of falling cost will form a profit in this transaction. If you are mistaken in my calculations, and the prices moved in the opposite direction, the level of growth / falling value will determine your losses.
In traditional trade without CFD, prices in the long run should grow. Using CFD contracts, you can make a profit on both growing and In the falling markets. Do not forget that in this case there are risks of losses if your forecast for the price of the index is incorrect. Therefore, be extremely careful when trading by any derivatives.
Trade CFD-indexes with credit shoulder
One of the biggest problems for many traders lies in the lack of capital necessary for working with a diversified investment portfolio. As a rule, trading participants often elementary lacking money to conclude transactions With a variety of assets. CFD contracts solve this problem through the provision of a loan shoulder. The use of such a brokerage loan allows you to diversify a personal investment fund with a relatively small deposit. Margin requirements In this case, small, which allows you to distribute your portfolio for various financial instruments, such as CFD, CFD, CFD products and CFD indices.
XTRADE offers credit shoulder 20: 1 when trading indexes. This means that every dollar You get 20 dollars financial support for selected assets.
Credit potential arising from making transactions simultaneously with several indicators, which respectively reduces the risks of serious loss. However, it is worth understanding that the credit shoulder can always turn against you if the market movement will dominate in the direction opposite to your forecast.
Risk reduction strategy
Suppose you have invested significant funds in the shares of technological companies, Current on NASDAQ. You may want to protect yourself from damages, hedging CFD indexes. Recall that the hedging strategy (risk reduction) is additional investments that protect against losses in other assets. If you are trying to protect your traditional investments in AAPL, GOOG, FB or AMZN technological shares, then you can consider, for example, the possibility of a short sale of CFD indexes.
When trading indexes on the XTRADE you will get access to many useful automated tools. This is a stop-loss – closure Positions when achieving the desired price of the asset. Or stop limit – automatic sale / purchase of the index, if the market began to move not your favor.
Correctly predicting index price movement, you can make a profit from the CFD index trading. To increase the likelihood of a successful transaction, it is necessary to carry out a comprehensive technical and fundamental analysis using diagrams, graphs and macroeconomic variables. One warning should be made: contracts for price differences by nature They are quite risky transactions, so periodic losses are inevitable. The whole question is in the ratio of profit and losses, which should be in favor of your wallet. To immediately do not risk real money, practice the CFD trading on the demo account. Such training will help you master the basic methods of trade in indexes, developing not only practical skills, but also intuition.
There are many different factors that can affect the price of indexes, namely:
large-scale geopolitical events; global and sectoral economic crises; tax policy of individual countries; Environmental and technogenic catastrophes; exits of new products of international importance; Financial reports of large companies
However, in general, indices are considered exchange assets with small trading risks in comparison, for example, with shares of large companies. Because large indexes cannot simply disappear or go bankrupt, even if some of them come out of some components. At The output of one accumulator set to the index automatically includes the following “basket”, which is always on the queue. So in this case, the investor does not risk losing all means as it happens with the shares of bankrupt companies.
Indexes price is calculated in two ways:
The cost is formed with the orientation on the company with a high value of shares that have a significant weight in the index. The price is made up from the weighted average market value, where the total amount of shares multiplied by the cost, Determines the importance of the company in the index.
Apply your trading knowledge!
The information provided in this article will certainly help you in trade in indexes on the XTrade brokerage platform with its impressive user and technical potential. Learn to analyze the effect of macroeconomic indicators on the price of stock indicators, reducing the risks by the distribution of investments between different assets. Xtrade WebTrader is a powerful trading tool presented by desktop and mobile versions. For Android, iOS and tablets. Now at your disposal there is everything necessary for effective work on the leading stock exchanges!