Which Stock Indices can I trade on XM platforms?

Invest in Stock Indices on XM

Stock indices, or stock indices, are, in a simplified way, indices that represent the overall price of a set of underlying stocks.

The major stock indices (stock indices of the world) include, but are not limited to, the following:

• S&P 500
• Dow Jones
• Nasdaq
• FTSE100
• Nikkei225
• DAX
• CAC40
• Euro Stoxx 50
• ASX200

Stock indices are, in most cases, a representation of the big picture of the stock market, to which your basket belongs.

In most cases, the underlying stocks that belong to a stock index represent the most influential (largest capitalization) companies.

Invest in Stock Indices on XM

Available Stock Indices for trading on XM

On XM MT4 and MT5 trading platforms, you can invest in various stock indices.

The followings are some of the main Stock Indices available for trading on XM.

S&P 500 (US500)

The S & P500 (US500) stock index was introduced by the American financial services company Standard & Poor’s Financial Services LLC in 1957. It is a leading indicator of American indices, and is one of the most frequently used benchmarks by the general American stock market; it covers about 75% of the American stock market by capitalization.

ASX200 (Australia200)

The ASX 200 (AUS200) index is a market capitalization-weighted stock index of securities listed on the Australian Stock Market, which belongs to the 15 major stock groups in the world, with an average daily volume of $ 4,685 million. The index exclusively includes stocks from the Australian Stock Market.

Nikkei 225 (JP225)

The Nikkei 225 (JP225) index, commonly known as the Nikkei, is a stock index of the Tokyo Stock Market, the third-largest stock market in the world, with a market capitalization of $ 4 trillion.

HSI (HK50)

The Hang Seng HSI (HK50) is a market capitalization-weighted stock index that has been used since 1969 to record the daily changes of the top 50 companies present in the second-largest stock market in Asia (and sixth in the world), the Hong Kong Stock Market (HKEx).

FTSE 100 (UK100)

The FTSE 100 (UK100) stock index stands for Financial Times 100 Stock Index, and comprises the 100 companies with the highest market capitalization on the London Stock Market.

NASDAQ 100 (US100)

The main NASDAQ index is the composite NASDAQ, with its secondary set NASDAQ 100 (US100) comprising 107 stock indices issued by the 107 most powerful non-financial companies that are included in the NASDAQ stock index.

DJIA (US30)

DJIA (US30), the second oldest stock market in the United States, after the Dow Jones Transportation Average, shows the performance of the top 30 American companies during a standard trading session on the stock market. It is calculated by the divisor DJIA, dividing the total sum of all the prices of the 30 securities it represents.

DAX (GER30)

DAX (GER30), short for Deutscher Aktienindex, is Germany’s leading stock index, representing the 30 largest companies trading on the Frankfurt Stock Exchange. It is considered a blue-chip index in terms of quality and profit.

CAC 40 (FRA40)

The French stock market index, CAC 40 (FRA40), short for Cotation Assistée en Continu, represents the 40 most significant stocks among the 100 companies with the largest capitalization of the French stock market Euronext Paris, second Europe’s largest stock exchange.

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Things you should know about Stock Indices Trading

Stock indices, also known as stock indices, are actual stock indices, which measure the value of a specific section of a stock market.

They are calculated according to a weighted average of the prices of selected securities, which belong to the category they represent.

Stock indices can represent a specific stock market, such as NASDAQ, or it can represent a specific set of the largest companies in a nation, such as the North American S&P 500 index, the British FTSE 100, or the Japanese Nikkei 225.

The purpose of indices is to show the general direction of a specific stock market or a nation’s economy.

However, stock indices are made up of a set of companies that can be greatly affected by a large movement of a company, or by a major event in a particular trade sector.

The actual weight given to a stock index from the underlying portfolio of stocks varies between the various indices, which means that not all use the same criteria to obtain the bottom line.

The two main ways to calculate the actual weight that an underlying stock contributes to the index itself are by price-weighted and by capitalization-weighted.

Below you can see the category to which some very popular indexes belong:

• Dow Jones (US30) and Nikkei 225 (Japan225) are price-weighted indices.
• FTSE 100 (UK 100), ASX200 (Australia 200), Hang Seng Index (Hong Kong 50), DAX (Germany 30), CAC 40 (France 40) and IBEX35 (Spain 35), are the main stock indices weighted by capitalization.

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How to calculate Dividend adjustments on Stock Indices

CFDs on liquid indices are subject to dividend adjustments.

When an index member pays dividends to his shareholders, he is essentially reducing the value of the company by the amount of the dividend.

This is reflected on the ex-dividend date as a reduction in the company’s share price, and as a reduction in the value of the index in proportion to the weight of the share within the index.

To ensure that there is no impact on positions, dividend adjustments will be made to the accounts of clients holding a position in the index at 00:00 (GMT + 2 time zone; daylight saving time may apply) in the ex-dividend date.

The dividend adjustment is made before the market opens on the ex-dividend date (market hours can be seen above).

CFDs on Germany30 (GER30Cash) are not subject to dividend adjustments because the dividends paid for its component shares are reinvested in the index itself.

Therefore, there is no downward adjustment due to a member paying a dividend.

Similarly, CFDs on future indices are not subject to dividend adjustments.

Purchase operations will receive an amount calculated as follows:

Dividend adjustment = declared index dividend x position size in lots

Sales operations will be charged at an amount calculated as follows:

Dividend adjustment = declared index dividend x position size in lots

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How does Stock Index trading work on XM?

Throughout a trading day, the stock prices of certain companies will go up or down.

Since a stock index is a compendium of a set of underlying stocks, its real price will rise or fall according to global dynamics (mathematical and statistical formula) and each stock price will contribute to its final price.

The following are interesting points to understand when to trade stock indices:

1. All stocks in a specific stock index (for example, Dow Jones) are subject to a selection process and may be substituted by another company if their overall trading performance is outperformed by another. In other words, the companies that belong to a stock index are not guaranteed to always be the same.
2. Determining the influence of a specific stock on the global stock index includes calculations and rules. Not all stocks that are added to the index set are treated the same. In other words, the global price of the stock index is not a simple sum of the stock prices and a division by the number of shares.
3. A stock index shows the general consensus and can be considered as a benchmark of the performance of the global stock market with historical value.
4. As mentioned in point 2, since not all the stocks that belong to the set of the index are treated equally, greater weight is given to the index of companies with the highest capitalization. This means that if for any reason the stock of a large company falls, the global index will also fall even if the rest of the stocks in the group are not falling.
5. As noted in point 1, the underlying stocks that belong to the pool, called the index, change over time. The historical period of an index does not always represent the same set of stocks.

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