How to trade Stock Indices
Have you ever wondered what is all the other stuff that you keep seeing on your Mt4 Trading platform? Well let me educate you a little about the joys of trading, you can trade many other things other than your major currencies. Maybe up to now you thought trading stocks is not for you, you are a Forex trader, an opportunity for stock index trading is presented right in front of you, you see it every day when you log in to your trading platform, if you are like me, taken trading financial markets as a career, you might want to diversify your portfolio by introducing stock index trading to your daily activities, instead of trading currencies only. Let me start by identifying some of the few stock indices that you can check out.
|Ftse100||Comprises of 100 companies on London Stock Exchange (Vodafone is one of the companies listed)|
|SP500||Comprises of highly market public held companies, Bank of America is also listed|
|Dax||Represents 30 largest and most liquid German companies that trade on the Frankfurt Exchange|
Difference between Stock trading and Stock index trading.
Stock index trading:
You are trading a basket of stocks which makes up an index, but you go through one of the instruments like NASDAQ.
you are trading stocks of specific companies, and each company has its own price. Once you bought, you own stock and it has to be transferred by the seller.
Advantages of trading Stock Index
- Stock indices have generally higher returns than stock market they represent.
- The Volatility is reduced compared to currencies.
- Stock index trading requires less research as opposed to trading /investing in individual stocks.
- When trading stock index e.g FTSE 100, you do not have to spend weeks analyzing all 100 companies under this umbrella but all you can do is just follow FTSE 100 index as you would do analyzing your currencies.
- Stock index trading does not require any traditional stock brokerage where you pay high fees, you can buy and sell on the same mt4 trading platform as you would do with your currencies and it is cheaper.
How to trade FTSE 100:
You will have to know what is happening in the markets as far as economic calendar is concerned in order to succeed in this, some few points to consider when trading FTSE 100 index, the release of interest rates announcements, UK manufacturing numbers, GDP (gross domestic products) figures, housing figures and inflation data, all the above are key to trading FTSE 100 successfully, this index tends to imitate the European markets as it trades at the same time frame as European markets. As I always say “we are eating this elephant one piece at a time. To start trading stock indices, open your account HERE. If you find this post useful, please kindly share with your social media groups using the share buttons below, thank you so much for stopping by and reading my post, stay tuned for more.