TRADING INDICES WITH VPFX
Getting access to all the perks of market movement and economic trends without having to deal with the high risk of losing money – that is what Indices Trading is all about. Investors, veteran traders and market analysts, all consider Index CFDs to be a good vehicle to manage the risks associated with stock trading. The sheer simplicity offered by index trading happens to be its biggest allure. The idea is to speculate on the movement of market indices rather than putting in all the effort into researching individual company stocks and their growth potential before investing. Add in the efficiency of a modern Indices Trading Platform combined with trade partners like VPFX and you have the perfect trifecta that every investor dreams about!
The sheer simplicity offered by index trading happens to be its biggest allure. The idea is to speculate on the movement of market indices rather than putting in all the effort into researching individual company stocks and their growth potential before investing. Add in the efficiency of a modern Indices Trading Platform combined with trade partners like VPFX and you have the perfect trifecta that every investor dreams about!
Diversification of portfolio
Ability to short sell
Access to global economies
Zero Commissions
1:500 Leverage
Introduction: Indices Trading
In simple terms, when you engage in trading indices, you are trading an index or compilation of shares rather than buying or selling individual company stocks. Many consider it to be a more passive trading style. However, it does offer lower risk of losing money when trading CFDs along with an opportunity to hold a diversified portfolio of investments and relative freedom from price movements. You get exposure to the entire economy with a single trade and can benefit from collective averaging of stocks as well as explore more creative and actionable trade ideas. Indices Trading is a win-win in every way, especially for an investor who is just starting out in the world of CFD trading.
Indices Trading - What Is An Index?
Indexes represent the state of a broad industry sector by tracking the collective performance of a large group of carefully selected shares from the same segment of the economy. An index is calculated as a weighted average of the price of its constituent stocks and is taken as an indicator of health of the particular economy or industry that it is tracking.
Indices Trading - What types of Indices are out there?
Popular indices to start trading include the Dow Jones Industrial Average, the S&P 500, the NASDAQ 100, the FTSE 100, the DAX30, the Nikkei 225, the ASX200 and so on. However, when you are looking to understand their basics, these indexes can be categorized into the following broad sub-types:
Country Based
These represent the stock market performance of specific countries. Like the DAX30 tracks the economy of Germany while the S&P500 broadly represents the US stock market.Exchange Based
These are used to track the stocks listed on a particular stock exchange like the NASDAQ100 represents the non-financial stocks that are listed on the NASDAQ.Regional Based
These Indexes are used to track the performance of stocks listed in specific geographic zones like the Asia Pacific Index does for the listed stocks from developed countries within Asia.Sector Based
These track the performance of stocks from specific market sectors like healthcare, finance and more. Apart from the above, there are also market-cap weighted indices and price-weighted indices that can be used by investors to trade indices.Indices Trading - What Drives Prices Of An Indice?
Losing money rapidly while playing the financial markets is the worst nightmare for any investor, regardless of their risk management appetite. The only way to protect yourself and your money is thorough market analysis, extensive trading experience and developing a keen eye for spotting trading opportunities. While trading stock indices does reduce the risks involved owing, traders still need to understand and follow the many factors that may influence particular indice prices and marker movements. These are some of the many factors that you need to watch out for when trading in stock index CFDs:
- Market News always has a direct impact on stock market performance. Any data like GDP numbers, interest rate movements, major industry announcements and so on can impact share prices and their linked indices.
- Geo-Political Events impact industry future as well as investor sentiment. These tend to drive stock markets into erratic directions. Terrorist attacks, international conflicts, trade wars and social unrest are all factors that can drive stock markets up or down.
- Company Announcements will also have a direct impact on all the indices that their stocks are a part of. Traders dealing in particular indexes therefore, need to keep an eye out for new product numbers, performance reports, quarterly numbers and so on to anticipate market movements.
- Movements In The Forex Market also create huge impacts in specific indexes. The FTSE100, for example is highly sensitive to trends in foreign exchange markets and therefore, traders dealing in such indices need to be watchful of any major market trends in the sector.
- And finally, Investor Sentiment and its impact on stock markets is a loosely understood yet ever-present factor that drives share prices in unexpected directions. Any trading strategy therefore, must take the emotional component of market movements into account to prevent loss of money when trading CFDs
Indices Trading Conditions
Symbol
AX
DJ
YM
SP
ES
ND
NQ
DESCRIPTION
(DAX) German Stock Index
Dow Jones Index
E-mini Dow Jones Index
S&P 500 Index
E-mini S&P 500 Index
NASDAQ 100 Index
E-Mini Nasdaq 100 Index
MINIMUM LOT
0.01
0.01
0.01
0.01
0.01
0.01
0.01
MARGIN
$1000 per 1 Lot
$2000 per 1 Lot
$1000 per 1 Lot
$2500 per 1 Lot
$1000 per 1 Lot
$2500 per 1 Lot
$1000 per 1 Lot
CONTRACT SIZE
EUR 25 times Index
$10 times Index
$5 times Index
$250 times Index
$50 times Index
$100 times Index
$20 times Index
Indices Trading - How To Manage High Risk Of Losing Money?
Financial markets do have the tendency to surprise even the most seasoned of investors. Therefore, even if you have chosen to engage in index-linked CFD trading, it will always be a good idea to have a few check-and-balances in place to manage the high risk of losing investments. A few tried-and-tested strategies for dealing with high risk trades in stock indices include:
Position Size
Before you start trading CFDs lined to stock indices, it is always a good idea to determine the optimal position size that you wish to aim for. You can follow a simple rule-of-thumb: Do Not risk more than 2% of your capital on any single trade. This will ensure that you don’t lose money when trading due to a single unexpected market event.
Stop Losses
Use this simple tool to prevent trading losses from building up to a size that your portfolio and capital cannot handle.
Calendar Based Planning
When you trade CFDs linked to any stock index, it is always a good idea understand and track the predictable calendar of events that may affect the prices of your chosen stocks. This will help you anticipate price movements and prevent you from losing money rapidly due to price movements stemming from scheduled economic data releases, sectoral performance reports and so on.
Indices Trading - Why Choose VPFX?
- We are fully licensed and regulated, and compliant with relevant market authorities and regulation agencies across global trading platforms.
- We offer speed and efficiency in execution of your transactions.
- Our spreads are amongst the most competitive in the market.
- We also let you get additional returns through referral schemes and other value addition programs if you open a trading account with us.
- VPFX charges no transaction fees and minimum commissions – a combo that you will rarely find with any other trading platform out there!
- Our system ensures segregation of client funds in Tier-I Banks, thereby taking care of the safety of your money.
- Our trading platform performs with equal efficiency and ease across trading hours and markets, whether you are using it on a desktop, laptop, tablet or a mobile device.
Placing your trades in tandem with index movements is like surfing – you are basically riding a wave and using its momentum to reach your targeted goals of profitability. Whether you are into margin trading or are following forex market lined indices, smart risk management strategies and efficient trading platforms can go a long way in maximizing your returns.
And with a partner like VPFX on your side, your growth rate is guaranteed to achieve its maximum trajectory. Open a trading account with us today!
Indices Trading - FAQs
Global indices are powerful indicators representing the direction of companies’ quotes in specific industries. Investors generally trade indices to either speculate on a particular economy or to protect against the shares in their portfolio losing value. While there may be no definitive way to gaining the most from any kind of trading, one can choose to trade CFDs linked with stock indexes to make safe plays in the financial markets. You need market data, smart trading strategies and a host of risk management tools to ensure you don't lose money when trading index-linked CFDs.
Start by opening a demo account with reliable and efficient trading platforms like VPFX. Then you need to put in a bit of research and choose the index that best suits your trading style. This will be influenced by your capital availability, risk appetite and preference between long or short term positions. Next, put your risk management strategies in place and you are good to go!
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