Indices
| Instrument | Description | Average Spread (Pips) |
|---|---|---|
| GERMAN30 | DAX Index | 1.6 |
| DOW30 | Dow Jones 30 Index | 2.2 |
| S&P500 | S&P Index | 1.5 |
| NAS100 | Nasdaq 100 Index | 1.8 |
| UK100 | UK 100 Index | 12 |
| HONGKONG50 | Hang Seng 50 Index | 0.6 |
What is Indices Trade?
Indices trade also known as index trading is nothing but buying and selling a specific stock market index. It represents the performance of a group of stocks. Based on the rise and fall on the price of the index, it determines whether one should buy or sell it. As the price within the index goes up the value of the index increases.
Comparatively, trading indices carries less risk than trading in individual stocks. Here, the investors aim to make a profit by speculating on the price movements of stock markets like FTSE 100, Dow Jones etc. We at Centro Global, allow investors to trade around the biggest global stock indices. Some of them include the Wall Street 30 index, NASDAQ, German DAX and more. It provides tightest spreads in the market with low margin requirements
When you’re trading indices you’re investing in the performance of the exchange itself, rather than investing in a single company on the exchange.
One of the great things about trading indices is it allows you to get more exposure into the entire exchange. Not only in exchange, but also in the sector, economy with a single position, rather than investing in an individual stock. The best way to trade indices is via CFDs.
There are two types when you trade indices online i.e. index cash CFDs and index futures CFDs. The main difference between these two types is that cash does not have expiry date whereas the future has. It is known as rollover.
As an investor you can profit from either a rise or fall in prices, depending on whether you have a long or short position. Comparatively, index trading is more secure than stock trading as, unlike a company, an index cannot go bankrupt.
Frequently Asked questions
The New York Stock Exchange is the largest stock exchange in the world with a market cap of over $25 trillion. The next biggest, in accordance with their market cap, are the NASDAQ, Tokyo Stock Exchange and the Euronext Stock Exchange. Other major exchanges include the London Stock Exchange (LSE), S&P 500, Dow Jones Industrial Average, the Hong Kong Stock Exchange and DAX index.
Indexes offer a benchmark allowing you to see how your investments, and the economy overall, are performing. The clue is in the name – indices are indicators. Indices are there to provide a baseline to measure your portfolio and also to help investors decide on stock investments if they don’t know which individual stocks to invest in.
Trading indices carries less risk than other trading because you’re not investing in a single company, which has the potential to run into trouble in a short space of time. You also avoid the risk of losing all your money, because an index cannot go bankrupt, like a company can. Indices benefit from the global economic situation and so if one of the companies is doing badly on your index, the others may be doing well so your investment can still rise, unlike individual stock trading. Indices are passively managed too so you don’t have to pay fees to a portfolio manager to manage your investment.
Centro Global enables its clients to begin trading indices on Centro Global Trader, with a minimum account size of $100.
