How to start trading Stock Indices on AvaTrade? Table of Contents

Trading on indices is a balanced way to trade on the main financial markets in the world without having to analyze the performance of a single stock of a company.

Online index trading is a great way to speculate on the world’s major financial markets and keep up with the major stock markets.

Indices are financial derivatives calculated as a weighted average of the share prices of the best-performing companies listed on the stock exchange.

Start trading on stock indices around the world and enjoy the benefits of trading with an award-winning regulated broker!

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Trade Stock Indices on AvaTrade

AvaTrade offers one of the broadest choices of stock indices among online brokers, with markets from all over the world.

Register on AvaTrade to trade indices online with competitive spreads, leveraged trading, and fast, reliable execution.

  • Trade major US, European, and Asian stock indices.
  • Go long or short and trade according to your view of the market.
  • Get up to 200: 1 leverage with indices trading.
  • A selection of powerful trading platforms, including MetaTrader4 and MetaTrader5 platforms for desktop, tablet and mobile.
  • Web trading platform (no download and no installation required).
  • Automated trading solutions available in addition to Guardian Angel add-ons.
  • Benefit from the security offered by a globally regulated forex broker for your trading.
  • Exceptional multilingual customer support.

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What are Stock Indices?

CFDs on equity indices are financial instruments that represent the value of the underlying companies listed on the stock exchange.

One of the main indices is the S&P 500, which reflects the total value of the top 500 companies listed on the US stock exchanges.

If the overall value of the shares of its constituent companies increases, the price of the S&P 500 will also increase.

There are also indices representing smaller companies listed on the NYSE, such as the Russell 2000 Index, as well as other indices from various stock exchanges around the world, including China’s China A50, Japan’s NIKKEI, Frankfurt’s, and AEX. of Amsterdam.

Equity indices track and measure particular baskets of related stocks.

With thousands of shares traded on major exchanges, indices provide an accurate and efficient way for investors to reliably track overall market sentiment and compare it to individual equity portfolios.

The advantage of trading with indices over trading in individual stocks, and the inclusion in passive investment strategies, is that they offer exposure to an entire sector.

Investors do not have to do extensive research into the corporate relationships of individual companies but just adopt a bullish or bearish stance, depending on the general market sentiment.

The price movement of the indices is also much more fluid as no individual stock can lead to an extreme surge in prices.

This of course makes index trading less volatile.

However, in light of the activity that occurs on individual stocks, indices offer sufficient volatility for traders who can thus seize various profit opportunities.

This is especially true for day traders and those who follow the news-based price action since indices often reflect the broader economic effects of political and economic changes.

For risk-averse traders and long-term traders, index investments allow for simple and effective diversification.

Instead of investing in a few stocks where risk is multiplied, index-based ETFs offer exposure to the entire stock market and at the same time reduce the risk of a single company having a negative impact on the entire trading portfolio.

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What are the main Stock Indices?

AvaTrade’s selection of 20 indices includes the most popular and most frequently traded indices in the industry today:

US500
The value of the US500 is based on the Standard & Poor’s 500 and the share prices of 500 leading companies in the United States.
US30
The Dow Jones-based index is a weighted average for the price of the 30 most significant stocks traded on the NASDAQ and the New York Stock Exchange (NYSE)
US-TECH100
This contract is based on the NASDAQ 100 index, which represents the value of 100 non-financial companies listed on the NASDAQ.
FTSE100
The FTSE 100 includes the 100 largest UK publicly traded companies
EURO STOXX 50
The Euro Stoxx 50 includes 50 shares of major European companies

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Which Stock Index is the best indicator?

A stock market index is a financial indicator that measures the performance of a basket of shares traded on the relevant stock exchange.

For example, the S&P 500 index includes the top 500 companies by market capitalization listed on the NYSE.

As a rule, each stock has a certain weight on the index, which depends on the market capitalization and which determines the level of influence on the index price.

The price of the stock index is calculated using the real-time prices of the stocks included in the index.

Any fluctuations affect the price of the index based on the weighting of the individual stock.

A stock market index often represents a specific section of a stock exchange, such as the largest market capitalization companies or a certain sector, such as financials.

The indices allow investors to assess the state of health and the performance of the activities of companies.

They also help detect long-term trends to estimate investment returns and identify new opportunities.

Equity indices are usually more stable and predictable.

This leads many traders to prefer the purchase and sale of CFDs on indices to benefit from stable trends and avoid the multiple risks associated with trading individual stocks.

Each stock market index acts as a financial indicator for a different part of the market.

Day traders may prefer a relevant index for the distribution of various markets and countries in the portfolio.

For example, in US markets, the NASDAQ Financial-100 covers the financial companies of the NASDAQ stock exchange, while the S&P SmallCap 600 measures the small-cap segment of the NYSE.

However, if you prefer to trade European stocks, the DAX 30 from Frankfurt or the CAC 40 from Paris can be a better indicator and better option for your trading portfolio.

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What is the best way to trade Stock Indices?

Each stock market index differs slightly from the others, therefore it is important to take into account the details of the index, such as, for example, the components, weighting, calculation, and trading hours.

From a fundamental point of view, the factors that affect stock prices, such as quarterly, or the sectors represented, such as new regulations, have a strong impact on the indices.

Economic data, such as GDP data, can in turn affect the price by weighing on the currency trend.

From a technical point of view, the relative stability of the trends makes the support and resistance levels reliable indicators for price targets and reversal points.

Invest in Stock Indices on AvaTrade