Index Trading for Beginners
As a beginner in the world of index trading, what do you have in mind?
- Are you looking for an Index Trading strategy that doesn’t require keeping a watch on the news 24/7?
- Do you want to understand how to read price actions so you won’t miss out on trades?
If you are scavenging the internet to help answer these questions, you are exactly where you need to be.
Continue reading this tixee Financial Market News blog to help explaining how trading index for beginners works.
What is an Index Value?
In the simplest of terms, it is a measuring gauge to check up on the general health and performance of the stock market.
A stock index is a variety of stocks collected in a basket, to track a market or sector. Stock market indices are not all the same size. Some measure a handful of stocks while others measure thousands in stocks.
Major Stock Indexes
- Some of the well-established and most traded indexes are listed below:
- The Dow Jones Industrial Average is a U.S. price-weighted index, based on price per share.
- The S&P 500 is a stock market index that is weighted based on market capitalization which is calculated by multiplying the outstanding shares by their market price.
- The FTSE 100 or Footsie is an index of those stocks listed on the London Stock Exchange with the highest market capitalization value.
Read Also: Best Indices To Trade
What Moves Stock Indexes?
The stock market is affected majorly by three broad factors: fundamental factors, technical factors, and market sentiments.
The fundamental factors are based on the company’s profitability.
The technical factors are related to the company’s history like charts, past traders and investors, etc.
Market sentiments reflect the consumer influence, market image, and expectations of companies. Other factors that influence the index market are:
- Liquidity
- Trends
- Demographics
- Global, economic, and company news
- Earnings base
- Political events
- Index reshuffle
What is Index Trading (for beginners)?
Index Trading is defined as the buying or selling of a specific stock market index.
Investors will speculate on whether the value of the index will rise or fall (based on several factors mentioned below) and decide if they want to sell or buy shares. The index is a collective average of the stock performance, hence you won’t be buying or selling any actual stocks rather the performance of a group of stocks.
Possible Advantages of Trading Indices
- Indices are a good way to expose yourself to a targeted market and sector.
- Trading indices allow you to speculate on the possible movement of an underlying index without owning any shares.
- You can increase your exposure with a small investment.
- Compared to other platforms – there are lower transaction costs.
- Market trends are clear and favor several trading styles without limiting the creativity of the trader.
- While providing adequate exposure to the market, there is reliable risk management and protection against the possible volatility from any stock.
- Just one account is enough to access indices from all over the world.
- Index reshuffling allows removing stocks that continue to perform badly and adding those which have significant growth potential.
Investing in Index Trading
Trading on our platform means a friendly environment towards Index Trading for Beginners!
There are two main types of indexes you can trade with at tixee. Both indices are CFDs (contract for difference). This means that you do not take ownership of any asset but simply trade its performance value.
Easy Three-Step Process Towards CFDs Index Trading
Pick your Index
There are several hundred different indexes you can track using index funds. Depending on the sector you want to trade in, you can choose an index comprising of the companies from your choice of industry.
Choose a Fund
After choosing an index you need to find an index fund to track that index. There may be multiple funds that track the same index, especially for popular indices like Doe Jones and S&P 500.
Open a Trading Account With tixee
Go on tixee, register with us and choose between four sophisticated account types tailored for your trading needs.
After verifying your trading account, you are free to explore the available CFD assets which you can find some of the most popular Indices. If you are comfortable getting into the markets you can open your first trade with us today.
