List of Equity Indices (Stock Indices) on XM

By opening an account with XM, you can invest in the following Equity Indices (Stock Indices).

  • AUS200Cash
  • EU50Cash
  • FRA40Cash
  • GER40Cash
  • HK50Cash
  • IT40Cash
  • JP225Cash
  • NETH25Cash
  • SPAIN35Cash
  • SWI20Cash
  • UK100Cash
  • US100Cash
  • US30Cash
  • US500Cash

XM provides data on global stock market indices in North America, Europe and Asia.

XM’s index CFDs are a popular choice for traders of all time frames and different types of transactions, 5 days a week, nearly 24 hours a day.

All indices provided by XM is CFDs (Contracts for Difference) derived from the underlying spot market.

As a derivative, traders can use leverage to freely trade long or short without having to hold the underlying market.

Invest in Stock Indices with XM

What are Stock Indices?

In the financial sector, an index is a collection of stocks that track their collective performance over time.

Usually, an index will represent a country or region’s large-cap stocks, mid-cap stocks or small-cap stocks; the media usually refer to the large-cap stock index.

For example, the Standard & Poor’s 500 Index tracks the 500 largest companies in the United States, while the Nasdaq 100 Index tracks the 100 largest US technology stocks.

However, although some stocks such as Facebook or Amazon appear in these two indexes, they will not be included in the Dow Jones Industrial Average, which tracks the 30 largest industrial stocks in the United States.

Overseas counterparts include DAX in Germany, CAC 40 in France, STOXX 50 in Europe, ASX200 in Australia and JPN225 in Japan.

As highly liquid tools, they are very suitable for technical analysis, which is why they attract new traders, end of day (EOD) and day traders.

However, due to their long-term trends and volatility, they are equally suitable for fundamental traders who focus on macro-view analysis.

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Why people invest in Stock Indices?

Long or short trading:
The ability to trade long (rising market) or short (falling market) is not only in the stock market or futures. Stockbrokers can limit or stop the number of shares that are lent to bearish speculators. If the futures market has a price limit, traders will not be able to enter or exit positions in the market. CFDs will not be affected by this problem-traders are free to trade long or short CFDs of their choice, regardless of the underlying market conditions, which makes the index very useful for novice traders, day traders and position traders Attractive.
Margin trading:
XM provides leverage as high as 100:1, and the margin XM gives to trade global indices is very low. This means that the amount of deposit required to trade cash CFDs is relatively low compared to the value of its underlying market.
Trading stocks:
The broader directional view of the index allows traders to take a position view of the broader market instead of focusing on individual stocks. For example, they may be optimistic about the U.S. economy and therefore choose to establish a long position on the S&P500 (US500). Or they may be bearish on the Japanese stock market and therefore decide to short (sell) the Nikkei 25 Index (N225).
Indices are highly liquid instruments:
because of the high trading volume of indices, they are considered highly liquid instruments, which means that they are relatively easy to buy and sell. An example of illiquid instruments is houses because of entering and exiting transactions It takes a long time. Since technical analysis usually performs better on liquidity tools, this is good news for chart enthusiasts and index traders, because indexes tend to focus more on technical analysis than low-liquidity stocks.

Invest in Stock Indices with XM

An indicator of risk appetite

The index is an excellent indicator of risk appetite, which means that when investors are confident in the future and can take more risks, stocks tend to rise.

On the contrary, the index tends to fall during the risk aversion period.

Although other factors also affect the direction of the market, when major unexpected events occur on a global scale, the correlation between risky assets becomes very strong, and they usually rise or fall simultaneously.

This provides ample opportunities for traders to carry out long and short trades, because profit is obtained between the two states of the appearance of risk and the end of the risk.

Examples of risk aversion topics include but are not limited to:

  • Geopolitical tensions (such as the Middle East war, trade war)
  • Unexpected election or referendum results (such as Trump or Brexit in 2016) • Virus outbreaks (such as Covid-19)
  • Government defaults (such as Argentine bonds) Default, lower credit rating)
  • Breakthrough in currency pegs (e.g. Euro/Swiss franc in 2015)

During the safe-haven period, it is not uncommon for global indexes to fall simultaneously and safe-haven assets such as gold, yen and Swiss francs to rise; on the contrary, once the tension continues and the market returns to the “risky” mode, the global index rises again, these trends Will quickly reverse.

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Index trading outperforms the market/pair trading

Although some traders prefer to trade only one or two indices, another method is to choose what they think will outperform the market (or show stronger momentum) in a certain country or industry The index.

For example, traders may be bullish on US stocks, but believe that technology stocks will outperform the broader market, so they decide to trade the Nasdaq 100 (USTEC) instead of the S&P 500.

Furthermore, the index is an excellent tool for pair trading (spread betting).

This is where a trader will go long one index and short another.

In doing so, the trader effectively hedges “market risk” by going long one index and shorting the other.

If all indexes fall, it can Limit the downside of investment.

However, vice versa. If all stocks rise, it may limit the upside potential.

This is why it is important for traders to correctly identify index performers, because it is assumed that stronger indexes will rise faster than other indexes.

And if all markets fall at the same time, the stronger index will offset the downside risk in this process, and other indexes will not fall as much.

Invest in Stock Indices with XM

The risk of diluting stock surprises

Because the index consists of a basket of stocks, individual company earnings surprises (whether positive or negative) have less impact on the underlying index.

This makes excessive gaps less likely when the market is closed, allowing traders to better manage their risks.

Of course, if we find that the profits of many companies are less than or exceed expectations, the impact on the index will be even greater. However, in this case, trading a single index is easier to manage.

For example, S&P/ASX200 (AUS200) is on the rise, but Westpac Bank, one of Australia’s “big four” banks, sold off due to unexpected earnings surprises or litigation.

Although it may still have a negative impact on the index, its impact on ASX200 should be relatively small.

Since the weights of all stocks and indexes are slightly different, it can at least help you have a basic understanding of the composition of the index and pay close attention to the earnings release to better enter the trading hours.

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Hedging open positions or portfolios

In order to hedge open positions, traders will open positions in the opposite direction to the initial transaction.

There may be several reasons for this, but the most common reason is to lock in profits or reduce risks before volatile events occur.

In some respects, it is equivalent to insurance premiums.

For example, if traders hold a profitable long position in Nikkei 225 (N225) on Friday afternoon, they are still optimistic about the transaction but want to lock in profits during the weekend to protect themselves from unfavorable weekend gaps, they can decide to Open an equal-weighted short position in the Nikkei 225 Index at the weekend.

  • If the market opens higher on Monday: the hedged position (short trade) will be negative, but the initial profitable position will offset the short position because it has made further profits.
  • If the market opens lower on Monday: the hedged position (long trade) will return at least part of the profit, but this loss will be offset by the hedged position (short), and the hedged position (short) will now show profit.
  • If the market opening price is near the same level: Hedging positions (short trades) will be near breakeven, while profitable positions (long trades) will remain profitable.

If stock investors hold a long-only stock portfolio, they can hedge some market risks by shorting the relevant index. For example, if they hold a group of US technology stocks but are worried about upcoming risk events, such as elections or earnings releases, they can short the Nasdaq 100 Index (USTEC).

Invest in Stock Indices with XM

Why choose XM to invest in Stock Indices?

Competitive spreads:
XM provides low transaction costs starting from spreads.
No fee:
Since there is no increase in commission in the transaction, the only transaction cost is the small spread.
Nearly 24 hours of trading:
XM’s index CFDs are also traded outside of the traditional exchange trading hours, allowing you to choose to trade your favorite index regardless of time zone restrictions.
Trading from North America, Europe and Asia:
Indexes range from Nasdaq technology stocks to Hong Kong’s HK50. XM provides important indexes.
No trader intervention:
By not interfering with your transaction, XM will not re-quote or add unnecessary delays to hinder your transaction.
Allowed:
Hedging a fully hedged position of the same size in the same market can offset your trading margin requirements.

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