Indices – another avenue to global markets


Following on Piggy’s discussion on CFD Share Trading, another angle that enables retail investors to gain access to global markets is through indices. In this case, the underlying instrument will be a stock market index. Most readers might recall occasions when they have watched the evening news on TV and heard references about the performance of the stock market such as, “Today the FTSE closed up 18 points and the Dow closed down 50 points.” These quotes are based upon the returns generated by stock market indices. Each country has its own stock exchange, the overall performance of which is typically measured by the performance of a basket of large capitalized individual stocks known as an index. An interesting aspect about indices is that no matter the number of indices an exchange may have, there is always a “flagship” index that is quoted in the media.  For example, in Great Britain, the index that is regarded as a true barometer of general stock market performance is the FTSE 100 Index; in the United States, there is the Dow Jones Industrial Average, Standard & Poor’s 500 and the NASDAQ.

Below are some spot index CFDs that traders can access through on-line trading platforms;

  • United States of America– US Nasdaq 100, US Dow Jones 30 and the US S&P500;
  • United Kingdom – FTSE 100 – this is an index of the 100 companies listed on the LSE with the highest market capitalization;
  • Europe-Euro Stoxx 50 – the index contains the largest companies in Europe such as Allianz, Deutsche Bank, Inditex, Repsol and Unilever;
  • Portugal -Portugal 20;
  • France-France CAC40 – the index future is the benchmark stock market index of the Euronext Paris;
  • Germany– Germany 30 (DAX) – the index future is a blue-chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange;
  • Netherlands – Netherlands 25;
  • Spain– Spain 35/ IBEX35 index future – this is the benchmark stock market index of the Bolsa de Madrid, Spain’s principal stock exchange;
  • Australia – Australia 200 – it measures the performance of the 200 largest index-eligible stocks on the ASX;
  • Japan– Japan 225 – this is the benchmark stock market index for the Tokyo Stock Exchange (TSE); and
  • China – Hong Kong 50/ HKG33 – the underlying instrument is the Mini-Hang Seng future. This is the benchmark stock market index of Hong Kong.

Overall, trading indices through CFDs gives traders the opportunity to tap into a multitude of markets and major economies in the world. This approach is suitable for short and long-term trading strategies as well as speculation.

Piggy has recommended beginners who would like to venture into the world of Global Market Online Trading to complete the babypips course. The instructions are outlined here; https://piggybankadvisor.com/2019/05/30/an-fx-trading-course-for-beginners/

Join a piggybankadvisor.com WhatsApp based social trading group today by following the link; https://chat.whatsapp.com/GOqNASPbCFWEyNDb5AWG28

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