What is Indices CFD Trading?
Stock Indices, or Equity Indices, are baskets of stocks representing the performance and measuring the value of the particular stock market sector they belong to. They are usually comprised of companies which have the largest market capitalization and highest trading activity in their corresponding stock exchange (e.g. NASDAQ 100) or country (e.g. Japan’s Nikkei 225).
Each index’ value is determined by the weighted average of its stocks’ prices, where companies with the largest capitalization contribute the most weight and determine the index’ overall performance.
Trading in Indices CFDs allows investors to diversify their portfolios across a broad variety of business and industry sectors, by taking advantage of opportunities in certain markets and mitigating risks in others.
How does Indices CFD Trading work?
Acquaint yourself with some of the most popular indices traded all around the world like S&P 500, NASDAQ 100, DAX 30, FTSE 100 and Dow Jones 30.
Speculating on the movement of the indices’ prices is comparatively more secure than individual stocks since the price of an index can be affected by the price fluctuations of the companies that constitute that index.
Other factors that can influence Indices' price can be economic forecast, political uncertainty, wars, natural disasters, and hazards.
Presuming that you have examined the above factors, you are now ready to invest. Decide on the position you would like to open. If your preferred Index has the potential to rise you may choose to buy. Otherwise, if you think that your preferable index will drop, you may then prefer to sell.