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.
| INSTRUMENT | CATEGORY |
| Down jones | Industrial |
| Nasdaq | Technology |
| 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.
Stock trading:
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.
I haven’t really traded the indices yet except for a few trades on the S&P but I have a feeling that I’ll be turning towards it soon.
Hello Haroun
I find it easier when i use their correlation to currencies. You should try it as well, maybe you might like it more, thank you for reading.
Thank you my sister,I’ve put all my hope on you.I’m only now praying for the day which I will be starting my classes with you.
My I’m sorry I can’t mention them,but two of them are here in RSA and one is from European Union.
No problem Mdumisen, im sure they do offer, you need to be taught how to utilise the mt4, that is why the proper education is necessary my brother.
My sister I like to ask you to educate me a little about joys of trading.I do like to take trading financial markets as a career,but I don’t know how to trade stock index.I’ve been checking my Market Watch to see if I can find stock indices you have spoke about,e.g(Dow Jones,NASDAQ,Ftse 100 and S&P 500.
But unfortunately I couldn’t find any of them.I don’t know whether is the trading platform I’m using, which doesn’t allow me to find them or I just need your advice to tell me where I can find them.I do understand that I still need more training to understand them,but it will be interesting to see how they look like when they are moving on the trading platform.
Please Help me.
Hello Mdumiseni,It is one basic thing that i teach, understanding the mt4, if you do not understand the Mt4 functions( which is where i start when doing private lessons) then you’ll be confused by things like this, you can find those by right clicking on market watch, on the drop down menu, you then select “SHOW ALL” you should have it then.
Thank you sisi wami,the list of currencies and stock indices I’ve in my mt4,does not have any of these major indices we looking for.Therefore it looks like I will have to be patient until I manage to join your private lessons because I don’t know why these indices are not included in my list.
If you still can’t find it might be your broker then, Forex brokers are not all the same.
Thank you sisi,that what exactly I think might have happened here to my demo,and this has made me unhappy because I’m using three different Forex brokers, and all of them have done same thing of not allowing me to choose what I think is now right for me to do it to change my life.Now I’m stuck with some thing I no more believe in it.
What brokers do you use Mdumiseni,if you don’t mind me asking
Thank you my sister to give me confidence.This is only career I believe in it, and I’ve got no doubt that with your help I will make it,and I will always put my hand up for you to pull me out from this burden.
At the moment this look and sound complicated to me because is my first time to hear about this type of trading .But I think when time comes to learn it.It will be easier to understand and enjoyable.
It is not complicated at all Mdumiseni,once you understand it you will surely enjoy your career as a Trader.