How to start trading Stock Indices on OctaFX's MT4, MT5 and cTrader?

Trading CFD products with OctaFX

As one of the fastest-growing financial products in the market, index CFDs provide a unique opportunity to profit from stock market volatility, while providing high leverage and flexible trading schedules.

Here you will find all the information you need to start trading CFDs.

As one of the fastest-growing financial products in the market, index CFDs provide a unique opportunity to profit from stock market volatility, while providing high leverage and flexible trading schedules.

If you are already familiar with foreign exchange trading, you may find that the index is an interesting market waiting for you to explore.

Although based on similar principles, index CFDs differ from currency trading in some respects.

Below you will find all the information you need to start trading CFDs.

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What is a CFD of Stock Indices?

By definition, an index is a statistical assessment of how the price of a stock has changed over time, which can assess the overall performance of a market.

According to the selection criteria, the index can be divided into national, global, industry or exchange index.

In addition, various calculation methods allow them to be subdivided into price-weighted stock indexes, value (or market capitalization) weighted indexes, and equal-weighted stock indexes.

A price-weighted index is the sum of the prices of each stock divided by the number of all stocks in the index, and the higher the price of the stock, the higher the weight, that is, the higher the price of a particular stock, the greater its impact on the index.

One of the most popular price-weighted indexes is the Dow Jones Industrial Average.

In a market value-weighted index, individual stocks are weighted by market value, that is, the greater the market value of the company’s issued stock, the greater the impact on the index.

The Nasdaq Index and the Standard & Poor’s 500 Index are examples of widely used value-weighted indexes.

The equal-weight index of all stocks refers to the same degree of impact on the performance of the securities in the sample and has nothing to do with the price and market value of the securities.

For multiple popular indexes, such as the S&P 500 index, there are also the same weighted versions.

It can be seen from the description that the index is basically a statistical value and cannot be directly traded.

However, we can benefit from index fluctuations through derivatives whose value comes from the underlying asset.

Derivatives can be swapped (such as futures and options) or over-the-counter (such as CFDs).

The former is realized through organized transactions, while the latter is carried out by both parties.

CFD stands for Contract for Difference, which is what we often call margin trading, which only uses the difference between the settlement price and the contract price for cash settlement.

Trading CFDs does not involve specific assets (such as commodities or shares), but their prices reflect changes in assets.

What distinguishes CFD from other derivatives is the ability to trade small amounts with higher leverage.

For an individual trader, this means that he or she can speculate on the fluctuation of the index price and obtain profit from the price fluctuation, with low principal and low risk.

Start trading Stock Indices with OctaFX

How to trade Stock Indices with OctaFX?

Major stock market indexes such as the FTSE 100 Index, Dow Jones Index, Standard & Poor’s Index and German DAX Index tend to perform well in technical analysis and are generally sought after by short-term traders.

Other popular indexes include France’s CAC-40 and Japan’s Nikkei 225.

Fundamentally speaking, this mainly depends on the country from which the index is sourced and the economic sector it represents.

The following will briefly introduce the main indexes we provide for trading.

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1. Dow Jones Industrial Index

Due to fluctuations in the US market, the Dow Jones Industrial Index is one of the most popular tools for traders.

Dow Jones is composed of 30 major US companies, reflecting the price level of the entire US industrial and commercial stocks, and is therefore affected by financial news in the region.

Trade Dow Jones Industrial Index with OctaFX

2. Standard & Poor’s 500 Index

Another popular U.S. index is the Standard & Poor’s 500, which is compiled based on the stock value of the 500 largest companies in the United States.

Since it covers 70% of the stock market, the Standard & Poor’s 500 can be considered a better indicator of the state of the US economy than Dow Jones.

Trade Standard & Poor’s 500 Index with OctaFX

3. Nasdaq 100 Index

The NASDAQ 100 index is composed of the 100 largest companies listed on the Nasdaq exchange, reflecting the inclusion of computer hardware And software, telecommunications, retail/wholesale trade, and biotechnology.

Affected by the economic impact of these industries, the index can be expected to be significantly affected by the US financial news.

Trade Nasdaq 100 Index with OctaFX

4. ASX 200 Index

According to the Sydney Futures Exchange (SFE) stock price index futures contract, the Australia 200 Index measures the trend of various industries in the Australian stock market.

It is not only affected by economic news in Australia but also by commodity prices because the economy is highly dependent on commodities.

Trade ASX 200 Index with OctaFX

5. Nikkei 225 Index

Nikkei 225 Index is usually called the Dow Jones contour in Japan.

The Nikkei 225 index is a stock index of the Tokyo Stock Exchange, including 225 companies in Japan, such as Canon Companies, Sony Corporation, and Toyota Motor Corporation.

Due to the high export-oriented nature of the Japanese economy, the index may be affected by some economic news in the United States.

Trade Nikkei 225 Index with OctaFX

6. Eurostoxx 50 Index

The European Stoxx 50 designed by Stoxx Ltd is a capitalized weighted index composed of the largest companies in Siemens, SAP, Sanofi, Bayer, BASF, and other industries.

The index covers 50 companies from 11 countries in the European Union: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

Trade Eurostoxx 50 Index with OctaFX

7. DAX 30 Index

Another popular weighted index is the German DAX, which is composed of the top 30 companies listed on the Frankfurt Stock Exchange, including BASF, SAP, Bayer, Allianz, etc.

It is generally considered a good market because it tends to have volatility that lasts for several hours and relatively small pullbacks.

Like all major stock indexes, it usually performs well on technical analysis and is influenced by general economic news from Germany and the European Union.

Trade DAX 30 Index with OctaFX

8. IBEX 35 Index

The BEX 35 index is drawn from the 35 most liquid Spanish stocks and is the benchmark stock market index of the Madrid Stock Exchange in Spain.

As a capitalization-weighted index, it is based on the free flow method, which means that it counts shares in the hands of public investors, rather than restricted shares held by company insiders.

Some of the largest companies it includes are BBVA, Santander, Telefónica, and Eberdrola, but it is important to note that the list is reviewed and updated twice a year.

Trade IBEX 35 Index with OctaFX

9. CAC 40 Index

Another European free-float market capitalization-weighted index, CAC 40 is the benchmark index of the French stock market.

It represents the top 40 stocks listed on the Paris Euronext stock exchange.

Since France accounts for one-fifth of the European economy, it can provide an opportunity to gain insight into the direction of the European market and to profit from its own price fluctuations.

CAC40 covers stocks in multiple industries, including pharmacology, banking, and petroleum equipment.

Trade CAC 40 Index with OctaFX

10. FTSE 100 Index

The Financial Times Stock Exchange 100 Index is a market capitalization-weighted index representing the top 100 blue-chip companies listed on the London Stock Exchange.

The index represents more than 80% of the total value of British capital.

Stocks are freely floating and weighted, and the composition of the index is determined quarterly to ensure that there are investment opportunities and the subject matter is included in the index.

The index is managed and compiled by the FTSE Group, and the index is a joint venture between the Financial Times and the London Stock Exchange.

Trade FTSE 100 Index with OctaFX

Start trading Stock Index CFDs with OctaFX

The first step is to open an OctaFX MT5 account, which provides all the above indexes, as well as 28 currency pairs, crude oil, and metals.

You will be able to enjoy no swaps, no handling fees, and low spreads trading.

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