HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Why Trade Indices


Indices trading describes the buying and selling of a specific stock market index. An index shows the performance of a group of stocks. When the price of a group of stocks go up, the value of the index increases. If the price falls, the value of the index will drop. One of the top performing and most widely known global indices is the Dow Jones. The Dow Jones Industrial Average tracks the overall performance of the 30 largest companies in the US. If the average price of the 30 companies goes up, the Dow Jones goes up as well. If the price goes down, the Dow Jones will fall too.

Read on to find out all about indices trading, index CFDs, why you should trade indices and how to get started.

Types of stock indices

There are different types of stock indices. The main types include the following:

How are indices calculated?

Indices are usually market-weighted or price-weighted. The S&P 500 Index is a market-weighted index which means that every stock in the index is represented in proportion to its total market capitalisation. Basically, if the total market value of all 500 companies in the S&P 500 falls by 10%, the value of the index also falls by 10%.

With price-weighted indices, companies with higher share prices, like the Dow Jones Industrial Average, have a bigger impact on the index.

Benefits of trading indices

Index trading is a popular way to gain exposure to financial markets without having to invest in individual company stocks, commodities or other assets directly.

What drives index prices?

If the prices of the stocks in the index rise, the index will rise, but if the prices fall, the index will fall. Share prices can be influenced by many different factors shown below:

How to trade indices

The most popular way to trade indices is by trading CFDs (Contracts for Difference) on spot indices. CFDs allow you to profit both from falling or rising prices. You can open a short (sell) position if you think the index price will fall. If you think the index price will rise, you can open a long (buy) position.

Basically, online indices trading on CFDs involves speculating on the rising or falling price of indices rather than owning the actual asset.

Choose your indices trading platform

Trading platforms provide a convenient way to trade indices. You can trade indices via the leading MetaTrader 4 trading platform or WebTrader. The best broker will offer the best indices trading platforms, and a reliable platform will offer you quick access to technical and fundamental analysis, an excellent security system, automated trading, as well as features like graphs and charts.

Explore indices trading opportunities with IronFX

Ready to start trading indices? Check out IronFX and explore indices trading opportunities with a reliable, global broker. Follow the steps below to start trading today:

#source


RELATED

Guide to Copy Trading: How to Replicate Trades

Copy trading presents the opportunity to mirror the trades executed by other experienced traders in real-time. The concept is to identify a trader with a proven track record...

ETF vs Index Fund: Similarities and Differences

Wondering what is the difference between ETFs and index funds? This article explains that and more, including what to look out for when choosing between them. Index funds and ETFs...

How to control your emotions while trading

Controlling one’s emotions while trading requires practice and mindfulness which means forex trading psychology. This presents a unique challenge for all traders when...

Popular trading myths you need to stop believing

If you are a newbie trader and you want to learn the truth about trading, one of the first things you need to have is an accurate understanding of what trading...

Ultimate guide to trade Stellar Lumens (XLM) for beginners

Stellar is one of the early cryptocurrency networks that has managed to maintain a leading position in the crypto markets. With innovative services...

Trading Highly Liquid Currency Pairs: A Comprehensive Guide

Venture into the dynamic domain of trading fluid currency pairs. Dive deep into understanding the moments of rise and fall, uncover the forces that mold each currency...

An Introduction to Precious Metals

Precious metals have been used as an investment option as well as a method to store wealth, with gold being the most commonly used. Today there are many ways to trade...

What are silver investments?

Silver investments are precious metals assets characterized by their availability and their potential to expand and diversify the investor's portfolio. There are many options...

Nixse: Deep Access to Global Markets

Trade over 1500 instruments on the NX Trader platform, choose from Currencies, Commodities, Stocks, Indices and Digital currencies with razor-thin fees and low commissions on all markets...

Forex swap: what it is, how it is calculated, and what are swap-free accounts in Octa

One of the most misunderstood terms in Forex trading is swap or Forex swap. To trade successfully, you should understand what Forex swap depends on and how it is calculated. This article describes what a Forex swap is, explains its mechanics, and describes swap-free trading accounts.

Ultimate guide to trading Polkadot for beginners

Blockchains and the innovations they offer largely existed as isolated entities in the crypto space, unable to share value or communicate with each other...

What You Need To Know Before Trading CFD

A Contract for difference offers investors and traders diverse opportunities to profit in the market from the price movement of assets without owning the asset...

How to Trade CFDs on Gold and Silver

Gold and silver have been chosen by traders for hundreds of years now. These metals are always in demand, especially from manufacturers of jewellery or other sectors such as the electronics...

Why Trade Forex: All around Forex Trading

It is widely known that forex is the most traded market in the world so once someone understands its benefits, it will become easier to understand why they need to trade forex...

What Are Meme Coins?

The cryptocurrency community has a ceaseless admiration for memes and pop culture. From its inception, meme coins have seen exponential growth in the crypto space...

Unlocking Potential: A Comprehensive Exploration into Day Trading

In the fluid and ever-evolving universe of finance, day trading has surfaced as a pivotal activity for individuals desiring to traverse the bustling waves of the stock market...

Guide to Forex Trading Costs: Unraveling the Fees

Forex trading, much like any financial venture, comes with its own set of costs. Grasping these costs is crucial for every trader, as it not only influences their bottom line but can also provide..

Everything you should know about mutual funds

A brief introduction to mutual funds and why you should invest in them, the risks, who should invest, their performance and the alternatives. Every year...

What is Risk Management in Forex?

A trade may be closed profitably or at a loss. Trading, as a whole, may become profitable or lead to losses. Risk management in Forex is about reducing the loss factors.

A Guide to Trading EURUSD

EUR/USD is the currency pair which matches the exchange rate of euro (EUR) against the US dollar (USD). Traders can trade EUR/USD using financial derivatives like contract-for-differences (CFDs)...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.