Lets understand what an Index is? Index is a measurement of value of a section of the stock market. It is estimated from the prices of selected stocks that are related in some way with each other. And index trading provides exposure to an entire economy with a single trade.
One of the most popular ways to trade indices is through CFDs (Contracts for Difference). Traders can be benefitted from both fall in prices and rise in prices, as you can open a long position if you think the index is going to rise and you can open a short position if you think the index is going to fall in the near future.
Indices trading allows you to get an overall exposure to companies listed in the stock market and considered as the passive trading style wherein risk of losing money is lowered with an opportunity to hold a diversified portfolio.
At VPFX we offer two kinds of trade in CFDs : Index Futures and Cash Indices
Generally traders who have a long term outlook prefer to trade in Index Futures and get a wider spread on funding charge.
Whereas traders with short term outlook and trade at the spot prices of the underlying market, generally have higher spreads than index futures.
Let’s look at Indices Trading in UAE Market, DFM (Dubai Financial Market) indices represents the overall performance of DFM- Listed Companies, providing a comprehensive and complimentary set of indexes DFM General Index, DFM Sharia’s Index (DFMSI), S&P/ Hawkamah UAE ESG Index on the top performing listed companies in UAE.
If we compare today’s market performance (DFM Index Value 3309.28) with the last three days (3330.05) there has been a fall of nearly 20 points (0.62%).
In order to start index trading one must compare different Indices Trading Platforms on the basis of :
- The amount required to open an account. At VPFX we do not charge any minimum amount to open an account and no transaction fees.
- The amount of margin that platform provides. At VPFX you get a leverage ratio of 1:500 which is one of the best leverages offered.
Different indices are traded in different times, one must consider the time periods wherein markets are majorly volatile or the market volumes and prices tend to go wild looking upon the latest news and events happening in the concerned area. If spoken in general terms, the best time to trade is simply when the market opens.
Let’s assume that the DFM market is trading at 3330.05. The technical indicators suggest that the next day open is going to be moving upwards and you decide to purchase a lot so for every price movement there is a profit or loss of 1 AED.
Now after three days market opened at 3350.50, now your profit will be calculated opening price less closing price (3350.50 – 3330.05)*1 = 20 AED.
At VPFX, the profit and loss are automatically converted into your account currency in real time, based on the current exchange rate.
VPFX provides its traders with best indices trading tips and strategies to make benefit of the opportunity market has for us.