Index trading involves speculating on the fluctuations in the prices of financial indices. A financial index serves as a statistical indicator that gauges the performance of a collection of stocks from a particular exchange.

Factors to consider when picking an index

Factors that can affect an index’s price include, but are not limited to:

• Political events
• Economic news
• Company financial results
• Trader sentiments

Most traded stock market indices

S&P 500

The Standard & Poor’s 500 (the S&P 500) is a widely recognized stock market index that measures the performance of 500 large publicly traded companies listed on US stock exchanges.

It is one of the most commonly followed equity indices and is considered a benchmark for the overall performance of the US share market. Some big names include Apple, Microsoft, Nvidia, and Amazon.

FTSE 100

The FTSE 100, also known as the Financial Times Stock Exchange 100 Index, is a stock market index that represents the performance of the 100 largest publicly traded companies listed on the London Stock Exchange (LSE).

It is one of the most widely recognized benchmarks for the UK stock market.

DAX

The DAX, previously known as Germany 30, represents the performance of the 40 largest and most actively traded companies listed on the Frankfurt Stock Exchange in Germany.

It is regarded as a benchmark index for the German stock market and is used to assess the performance of the country’s major corporations.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA), often referred to as simply the Dow, is a stock market index that measures the performance of 30 large, publicly traded companies in the US.

It is one of the oldest and most widely recognized stock indices across the world.

NASDAQ 100

The NASDAQ 100 is an index that tracks the performance of the 100 largest non-financial companies listed on the US NASDAQ stock exchange. It is often referred to as the “Nasdaq-100” or simply “Nasdaq”.

This index is considered tech-heavy, many tech giants such as Nvidia, Meta, and Tesla are tracked on it.

Trade indices via CFDs

One way to trade indices is through CFDs. A ‘Contract for Difference’ (CFD) is a financial agreement that involves exchanging the difference in price of an underlying asset between the opening and closing of the contract. It allows traders to make a profit on an index that is rising as well as dropping, since short selling is available in CFD trading.

To start trading indices CFDs, open a trading account on a regulated platform, plan your trading strategy and select the indices you want to trade!