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Trading Indices and Stock Index CFDs
Indices are a statistical measure of the performance of an asset class in the securities market which allows traders to understand and track the performance of a class of assets. Indices cannot be purchased directly – traders purchase an investment product such as an index fund or stock index CFD. Stock index CFDs (Contract for Difference) in the stock and bond market are financial instruments covering the value of a portfolio of securities which belong to a specific segment. There are various instruments that enable traders to take a short position on an index or have leveraged exposure to the index.
The advantage of trading index CFDs is that the trader enjoys exposure to the wide variety of assets included in the index, in a single transaction. Furthermore, trading CFDs based on indices is an easy field to enter, compared to investing in stocks. Indices tend to be a more balanced avenue for trading, since it is less affected by the fluctuation of a single stock, but its value is based on the collective performance of a large number of stocks.
Moreover, indices and stock index CFDs allow long or short trading, while certain stocks cannot be traded short. This expands trading opportunities by enables traders to profit on both the rise and fall of stocks. Indices are also liquid and volatile, with extensive trading hours, which offer additional benefits for traders.
Indices are a great way to understand the state of an economy at a high level. They offer a single statistic that provides a basic understanding at a glance. Looking at the historical movements of indices, you can understand market reactions to various scenarios throughout financial history, enabling traders to learn from the past and improve their future decisions relating to trading CFDs and stocks.
Variety of Indices and Stock Index CFDs
There are different types of indices, and stock index CFDs, including capitalization indices, fixed income indices, sector indices, residential property indices, strategy indices and volatility indices.
Examples of stock index CFDs include the Standard and Poor 500, one of the most popular indices in the United States. It covers 70% of the stocks traded in the USA. The Dow Jones Industrial Average (DJIA) is another major index, which comprises stocks from the 30 top-performing enterprises in the United States.
One of the advantages of trading stock index CFDs is the wide selection available to traders so that each trader can invest in a sector or region he is most interested or familiar with.
Who is CM Trading?
Why Trade Indices with Us?
The reason why so many traders choose to trade indices with CMTrading is simple – our excellent service and support. We guide our traders’ through each step with weekly educational webinars, eBooks, private training sessions and much more.
Trading indices allow you to diversify your trading portfolio and invest in the world’s major financial centers. We provide our traders with a leverage of up to 100:1, tight spreads and around-the-clock trading and support. With CMTrading, you can trade the world’s leading indices including the Dow Jones, FTSE, DAX, JSE and much more. With all this combined, CMTrading is your one-stop-shop for the ultimate trading experience.