Stock indices offer you the opportunity to trade an outlook on an economy without having to choose an individual stock. With unique advantages surrounding CFD trading, indices are one of the most preferred assets to trade.
What are Indices?
Investors and economists were looking for a method to analyze overall economic performance. The issue was that there was no way of making a statement on the European economy, for example, based solely on Siemens’ performance. This was the need that eventually brought about the creation of the stock index, which is a collection of an economy’s best-performing stocks, whose average is taken to give market participants an idea of what the general market situation is.
Indices can differ according to a number of factors. First off, the number of stocks composing an index can range from several dozens to thousands. Second, an index’s price is calculated through weighting. The average of price-weighted indices is based on the price of each stock comprising the index while the average of capitalization-weighted indices additionally, factors in the size of each company.
This means that the constantly changing price of an index is a reflection of the changing value of the individual stocks it’s comprised of and that is why it is an accurate gauge of not only economic performance but the performance of a specific industry.
Let’s take a look at the most popular indices and their respective trading sessions.
(Trading sessions follow the winter and summer schedule. The following times are Summer times and are all in GMT.)
Opens at 10:00pm
Closes at 7:00am
Main indices: S&P / ASX 200
Opens at 11:00 pm
Closes at 8:00 am
Main indices: Nikkei 225 / Nikkei 300 / JPX Nikkei 400
Hong Kong Session:
Opens at 1:00 am
Closes at 10:00 am
Main indices: Hang Seng / Hang Seng HK 35
Opens at 8:00 am
Closes at 5:00 pm
Main indices: FTSE 100 / FTSE 250
Opens at 7:00 am
Close at 4:00 pm
Main indices: DAX30 / CDAX
New York Session:
Opens at 12:00 pm
Closes at 9:00 pm
Main indices: S&P 500 / Dow Jones
Why trade indices?
1. Very high market liquidity
2. Access to global economic trends
3. Lower margin requirements
4. No restrictions on selling stocks short
5. Efficient tracking of a group of equities
Trading stock indices are just one, of the many ways, to diversify your portfolio.
This article is for educational and informative purposes only and should not be considered as investment or trading advice