How to start trading S&P / ASX 200 Index on AvaTrade?

The advantages of trading on the ASX with AvaTrade include:

• Intuitive and powerful trading platforms, for a wide range of trading strategies.
• Enjoy trading security with a regulated broker across 5 continents.
• Risk management tools and innovative trade opening options, including trailing stop and hard stop loss, as well as limit orders.
• Multilingual team of exceptional customer service.
• Get free access to a large collection of training materials

Trade S&P / ASX 200 Index on AvaTrade

The S&P / ASX 200 Index

The ASX 200 is an index that groups 200 stocks of companies with the largest market capitalization listed on the Australian Securities Exchange.

Representing the country’s major companies, the ASX 200 serves as an authoritative and credible barometer for the Australian economy.

The ASX 200, in fact, is the benchmark stock index for the Australian stock market.

The ASX 200 was inaugurated on March 31, 2000, when Standards & Poor’s took over management.

The index replaced the All Ordinaries index to become the leading investment benchmark in Australia and currently represents around 80% of the Australian stock market.

The ASX index was created to offer a tradable index with high liquidity and low turnover.

This has allowed the index to become a benchmark not only for investment returns but also for the definition of indices linked to the S&P ASX 200 and ETFs, including the S&P ASX 200, the ASX / SPI 200 Growth, the ‘ASX / SPI 200 LCSI, and the ASX / SPI 200 VIX.

The ASX 200 was launched with a price of 3133.3, which corresponded to the same value as the All Ordinaries index as of March 31, 2000.

The index is currently trading at around 5900 (February 2018), just below the psychological level of 6000 The index reached 6,000 for the first time since the 2008 global financial crisis in October 2017.

The index’s all-time high is 6749 points, which was reached in October 2007, just before the global financial crisis.

Open AvaTrade’s Account to trade S&P / ASX 200 Index

Why trade S&P / ASX 200 Index?

Liquidity

The index offers high liquidity thanks to the level of activity around the numerous stocks that make it up.

Linear price action

The index has a linear price action and is less subject to market shocks since no particular stock is able to influence the price of the broader index.

Wide information offer

The index is the most traded in Asia and attracts the attention of investors around the world. For this, it receives extensive media coverage, which facilitates the technical analysis of the financial markets and the fundamental ones.

Go to AvaTrade’s Official Website

Composition and calculation of the S&P / ASX 200 Index

The ASX 200 is a weighted index for free float-adjusted market capitalization.

The market capitalization (number of shares multiplied by the price per share) determines the entry of the stock in the index while being corrected for the free float, the S&P ASX 200 includes the shares of value held by the public, excluding those held by the government, by employees or by royalty.

As with all indices, the ASX 200 is measured in points and replicates the general price movement of the companies included in the index.

To be part of the index, the stock of a company must meet the following 3 ASX 200 criteria:

• It must be listed on the Australian Securities Exchange as an ordinary or preferred stock.
• It must have sufficient liquidity and that liquidity must not be controlled by a small group of investors.
• The correct market capitalization for the free float of the stock must be among the 200 largest on the Australian Securities Exchange, excluding strategic holdings or issues of new shares.

The S&P rebalances the index on a quarterly basis, adding and removing companies that meet or no longer meet the requirements of the ASX 200, based on data from the previous six months.

The S&P ASX 200 is the most traded instrument in Asia and the widespread interest in this index has led to the emergence of other important indices, including the S & P / ASX 200 A-REIT which reflects the importance of real estate trusts, the S&P / ASX 300 Metals & Mining which emphasizes the importance of mining in Australia and the S & P / ASX MidCap 50 which helps investors monitor the performance of asset-related stocks.

Open AvaTrade’s Account for Free

What influences the price of ASX 200 index?

Due to its composition, several factors (both internal and external) affect the overall price of the ASX 200.

First, the ASX 200 is composed mostly of financial and material-related stocks, hence the trend of these sectors will significantly affect the index price.

For example, 4 of the top 5 ASX 200 companies are financial institutions and a significant price change of one of the major stocks or a change in sentiment within the relevant sector will have a direct impact on the index price.

Financial stocks have proven to weigh heavily on the ASX 200, with the index losing 54% over the course of 16 months during the global financial crisis.

Economic factors, such as interest rates, economic forecasts, and inflation also affect the price of the ASX 200.

Interest rates usually have an inverse correlation with inflation and this is reflected in the stock market.

When the Reserve Bank of Australia decides to raise interest rates to control inflation, this leads to a general decline in stock prices, which in turn has an impact on the ASX 200.

Internal and global stability also have the ability to influence the index.

Although Australia is basically a stable economy, events on a global scale can have repercussions on the country’s main index.

The country plays a leading role in the global economy, thanks to strategic trade connections with both the West and China.

Events on the global economic chessboard, including military tensions, market crashes, and elections, affect sentiment towards the Australian stock market, which manifests itself in the price of the country’s main index.

Go to AvaTrade’s Official Website