Indices Trading

Indices Trading
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INDICES

Trade Indices with
an Award-Winning
Broker

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for a full list of our Indices
and typical spreads

FP Markets provides exposure to the major global stock indices through index Contracts for Difference ("CFDs"), at competitive leverage on world-class trading platforms. Online CFD indices trading is a great way to participate in the top global stock markets. With FP Markets, you can trade CFD indices futures from across the world at margins starting at just 1%. Trade AUS200 cash indices at AU$1 per point. Stay on top of overseas stock index movements with access to NASDAQ 100, S&P 500, EUREX, indices and more.

We’ve partnered with leading banking and non-banking financial institutions to ensure a deep liquidity pool, so that you get the best available market prices and ultra-low latency order execution.

What are the benefits of
Indices trading?

  • Trading CFD indices allows you to speculate on the direction of movement of the underlying index, without actually having physical ownership of any shares.

  • When you trade indices you get to trade both bullish and bearish price moves, giving you greater trading opportunities.

  • Competitive leverage means you can choose to increase your exposure with only a small investment from you.

  • Remember, CFD indices are a leveraged product which mean that you can also magnify your losses.

  • With powerful platforms like MT4, MT5 and Iress, FP Markets offers access to live streaming prices, cutting-edge technical analysis and charting tools.

FP Markets offers much more than Indices trading! We also offer Forex, Commodities,
Shares & Cryptocurrencies on competitive spreads in unparalleled trading conditions.

What is the Best Platform to Trade Indices?

MetaTrader 4, MetaTrader 5 & WebTrader. The world’s most popular trading platforms.

Discover the benefits of Indices trading on one of the most powerful trading platforms available, MetaTrader 4 (MT4). Available across desktop and mobile platforms the MetaTrader 4 platform is ready when you are.

Customisable interface, including colours of technical indicators


One-click trading


MarketWatch


Live price streaming on Live accounts and Demo accounts 128-bit
encryption for secure trading


Expert Advisors (EAs)


Customisable alerts


Compatible with iOS, Android and Mac devices

Are there more platform options?

We recommend MT4 for Indices but a range of products can also
be traded on MT5 and Iress platforms.

Why Trade
Index CFDs with
FP Markets?

Accessible

& Affordable

Benefit from our low-cost,
competitive margins,
starting at just 1%.

Convenient

Contract Size

With an exposure of $1
per point movement, cash
index contracts allow you to
precisely tailor your position
size according to your risk
management profile.

Zero

Commissions

The cost of cash index
contracts is built into the
bid-offer spread.

Hedge

Risk

Diversify your portfolio by
trading CFD indices
and hedge your risks.

index-trading

What is Index Trading?

Stock market indices give the measure of a specific stock market. They represent the value of a group of stocks from a country, and represents the overall, current and historic performance of a specific set of stocks. The calculated value of the stock index is used by investors as an indicator of the current value of their component stocks. Investors can find out the expected returns over time by comparing the current and historic index levels.

Every stock exchange in the world has a benchmark stock index, while some have several. These baskets of individual stocks are often ranked by independent institutions, like major banks or specialist companies like the FTSE Group or the Deutsche Börse. They also come in different sizes. For instance, the FTSE 100 tracks the share price of the top 100 companies listed on the London Stock Exchange, in terms of market capitalisation. The ASX 200 tracks the share price of the 200 top companies listed on the Australian Securities Exchange (ASX), while the SPI 200 futures contract is a benchmark equity index futures contract, based on the ASX 200 index.

It is impossible to track all the companies listed on a stock exchange, which is why traders resort to index trading. Through trading indices, they are able to measure the overall performance of the stock market of the country and the economy in general. Traders speculate on the price movements of these financial instruments indices to earn returns when the indices rise in value.

An Example of Indices CFD Trading

Suppose you want to trade CFDs, where the underlying asset is the US30, known as ‘’Dow Jones Industrial Average Index ” Let us suppose that the US30 is trading at:

us30-bid-ask-price

You decide to buy 5 contracts of US30 because you think that the US30 price will rise in the future. Your margin rate is 1%. This means that you need to deposit 1% of the total position value into your margin account.

In the next hour, if the price moves to 22100.00/22112.00, you have a winning trade. You could close your position by selling at the current (bid) price of US30 which is 22100.00.

In this case, the price moved in your favor. But, had the price declined instead, moving against your prediction, you could have made a loss. This continuous evaluation of price movements and resultant profit/loss happens daily. Accordingly, it leads to a net return (positive/negative) on your initial margin. In the loss scenario where your Free equity, (account balance + Profit/Loss) falls below the margin requirements (1105), the broker will issue a margin call. If you fail to deposit the money, and the market moves further against you, when your free equity reach the 50% of your initial margin the contract will be closed at the current market price, known as "stop out".

Notice how a small difference in price can offer opportunities to trade? This small difference is known as "pip" or "percentage in point". For Indices trading, 1 pip is equal to a price increment of 1.0 which is also called an Index point.

short-long-bid
If the price
of US30		 To You could Gain or Lose
for a Long Position		 Resulting in a Return
of the Initial Margin
Rises by + 1% 22300.80/22312.80 USD 1044 299.33%
Declines by -1% 21859.20/21871.20 USD -1164 199.22%

Benefits of Index Trading

With thousands of stocks trading across different exchanges, stock indices provide an accurate and reliable way to gauge the overall market sentiment. They can also act as benchmarks against individual stock portfolios.

They can offer exposure to an entire sector in a country. You do not have to perform thorough research on individual companies and other fundamentals. You can simply take a bullish or bearish position, depending on the overall market direction. They reduce the risk of a single company’s performance impacting your entire portfolio.

Price movements of indices are smoother, since individual stock performances cannot lead to intense spikes in volatility. But this volatility is sufficient for you to pick out numerous trading opportunities. There is a lot of activity that happens on individual stocks to produce ample index volatility. Indices trading can be suitable to traders of all styles and a variety of trading strategies, since indices reflect the broader effects of economic and political shifts.

6 Reasons to Choose
FP Markets

An Australian regulated Forex broker.

Globally Regulated

Segregated client funds
& regulation in Australia

Tighter Spreads Market

Market leading spreads from
0.0 pips, 24/5

Faster Execution

Low latency,
execution under 40ms

Advanced Platforms

MT4, MT5 & WebTrader with superior client portal

24/5 Multilingual
Customer Support

Award-winning support &
personal account managers

Established in 2005

15+ years
trading experience

CFD Indices Spreads

Symbol Product Standard A/c Raw ECN A/c
Min Avg Min Avg
AUS200 Australia 200 index Cash 0.28 1.82 0.28 1.82
US30 US 30 Index Cash 0.41 3.56 0.41 3.56
EURO50 Euro 50 Index Cash 0.71 2 0.71 2
FRA40 CAC40 Index Cash 0.8 1.96 0.8 1.96
GER30 German 30 Index Cash 0.31 1.73 0.31 1.73
HK50 Hang Seng Index Cash 1.55 04.09 1.55 04.09
JP225 Japan 225 Index Cash 1.91 8.74 1.91 8.74
US500 US 500 Index Cash 0.2 0.54 0.2 0.54
UK100 UK100 Index Cash 0.31 1.65 0.31 1.65
US100 US Tech 100 Index Cash 0.9 1.56 0.9 1.56
CHINA50 China A50 Index Cash 9.41 13.17 9.41 13.17
SING30 Singapore 30 Index Cash 1.05 1.22 1.05 1.22
VIX Volatility Index 0.14 0.05 0.14 0.05
USD Index US Dollar Index 0.02 0.009 0.02 0.009

Direct Market Access (DMA) Indices CFD Spreads

Available Indices
NASDAQ 100 E-Mini DJIA E-Mini (CBOT) Mini SPI 200
Nikkei 225 (CME) DAX Index SPI 200
S&P 500 E-Mini EURO Stoxx 50

Dividends Adjustments

If you hold an open Long position on a Cash Index CFD contract that pays a dividend, you will be entitled to an amount equal to the amount based on the number of contracts you hold after the close of the business day before the ex-dividend date.

Conversely, if you hold an open Short position in a Cash Index CFD which pays a dividend, you will be required to pay an amount based on the number of contracts you hold after the close of the business day before the ex-dividend date. This adjustment may be made either as a cash adjustment into your MetaTrader 4 or MetaTrader 5 trading account or included into the end of day swap rate.

How are Stock Market
Indices Calculated?

Financial experts and investors use a range of different methods to calculate Stock Indices. Some of the more popular methods are:

Market Capitalisation
Weighted Method

In this method, the stocks listed on the Index are weighted using the market capitalisation of each company. The S&P 500 and ASX 200 are major Indices that employ this method.

The Equal Weighted
Method

As indicated by its name, equal weightage is given to all the stocks based on their returns. The returns on each stock are calculated, added together and then divided by the total number of stocks on the Index.

The Price Weighted
Method

This model uses the price of applicable stocks to get a weighted average. Stocks with a higher share price are given greater weight, irrespective of market capitalisation. The Dow Jones in the United States uses the price weighted method.

What are the Most
Traded Indices?

FP Markets offers trading in more than a dozen of the world's largest, and most
trades global Indices.

Dow Jones: The Dow Jones Industrial Average often referred to as ‘the Dow’, is a price-weighted index of the 30 largest companies listed on stock exchanges in the United States. Salesforce, Boeing and Walt Disney are among the companies that make up the index.

S&P 500: Tracks the 500 largest US stocks and is weighted by market capitalisation. Well known companies on the S&P 500 include Amazon, Apple, Microsoft, Alphabet and Tesla.

FTSE 100: Is made up of the 100 largest stocks by market capitalisation on the London Stock Exchange. It is commonly referred to as the Footsie and includes major financial institutions such as Lloyds and Barclays.

ASX 200: Also weighted using market capitalisation, the ASX 200 is also maintained by Standard & Poor's and is the benchmark for equity performance in Australia.

How to Identify What
Moves an Index’s Price

Several factors which can influence
Indices markets

Movement in its Constituents: Significant price movement in the stocks included in a particular index is the biggest reason for a change in the value of the index.

Economic News and Data: Market news relating to economic data can affect stock markets and their benchmark Indices. This includes releases of key economic data relating to inflation, unemployment, and futures markets. Key information can be found in the Economic Calendar.

Political News: Elections, changes to monetary policy and trade relations are among the political factors that can impact financial markets and key components of them such as Indices.

Changes in Composition: The addition or removal of stocks from an index can cause fluctuations in its value.

Sector Specific: There are a wide range of sector specific Indices such as the NASDAQ 100 which does not include any companies from the financial industry.

Why Trade Indices

Trading opportunities: Through CFDs, traders can benefit from both rising and falling Indices prices.

Hedging: Indices can be particularly useful for hedging strategies as you can invest in an index of a particular sector. If the portfolio of a trader was made up of stocks from the financial sector, they could trade the NASDAQ 100 to counter any significant price movements in their current portfolio.

Diversification: Indices CFDs allow traders to gain exposure to global markets without having to invest in individual stocks. Australian traders can invest in the DAX 30 (Germany) or the Hang Seng (Hong Kong) to gain exposure to other markets.

Leverage: The ability to trade using leverage is one of the key attractions of CFD trading. Traders can open positions of a much higher value than the funds available in their trading account. Learn more about Margin Trading.

How to Trade Indices

A simple way to trade Indices is via CFDs using an online trading platform. These financial instruments allow traders to speculate on Indices without owning the underlying asset. FP Markets offers Indices trading through MetaTrader 4 and MetaTrader 5, the world's most popular CFD trading platforms. For further information, check out How to Trade Indices.

Indices Trading
- FAQ

Trading Costs: With CFD trading you do not take ownership of the underlying asset. This reduces the overall costs associated with trading.

Less Volatile: As they are made up of a number of different stocks, Indices are not as susceptible to sharp changes in value.

Leveraged Trading: Enables traders to gain larger exposure to Indices by depositing only the margin required to open the trade, rather than the full value of the position.

Find out more about the Benefits of Indices CFDs and how to trade them.

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* The average order execution time between the trade being received, processed and confirmed as executed by us is 43 milliseconds. As observed from our bridge provider between 01-11-2020 to 30-11-2020. FP Markets was rated by Investment Trends as the Best for Quality of Trade Execution 2019

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DISCLAIMER: This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; losses can exceed your initial payment and you must be able to meet all margin calls as soon as they are made. When trading CFDs you do not own or have any rights to the CFDs underlying assets.

FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354). FP Markets is a group of companies which include, First Prudential Markets Ltd (registration number HE 372179), a company authorised and regulated by the Cyprus Securities and Exchange Commission (CySEC License number 371/18, Registered Address: Griva Digeni, 109, Aigeo Court, 2nd floor, 3101, Limassol, Cyprus. FP Markets does not accept applications from U.S, Japan or New Zealand residents or residents from any other country or jurisdiction where such distribution or use would be contrary to those local laws or regulations.