Trading Index CFDs – The Markets, The Opportunities & The Challenges

6 Reasons Trading Index CFDs Continues to Grow in Popularity

Published on 16th September 2018

There’s no doubt that Index trading has become more popular over the past few years. And why not? Index trading gives you exposure to a collection of stocks, not just one or two individual stocks.

For example, if you trade the S&P 500 Index, you get exposure to the 500 leading companies in the US. This means you’re trading on the performance of the leading US large-cap stocks.

If you trade the NASDAQ 100, which is known as the non-financial and technology-heavy Index, you gain exposure to some of the leading online and tech companies such as Facebook, Amazon, Netflix and Google, also known as the FANGs.

Aside from the US, Europe also has a number of popular and heavily traded indices including the DAX in Germany and the CAC 40 in France. In the UK, you can trade the main Index which is the FTSE100. For those who want even broader access to the leading companies in Europe, you can trade the Stoxx50 index as well.

In Asia, you also have a number of major indices such as the Nikkei 225 in Japan, the Hang Seng Index in Hong Kong and the Shanghai Composite Index in China.

All these indices open up trading opportunities in different markets you may not have accessed before. At the same time, Index trading provides deep liquidity. The constant flow of buyers and sellers means you can easily get in and out of trades if required.

Why is Index trading becoming more popular?

There are a number of reasons for the growing popularity of index trading:

6 key reasons why traders love trading index CFDs

  • Technology and accessibility – It is a fact that technology is the main driver of change, efficiency and accessibility in the world of trading. With online trading access, you can trade almost any market across the globe as long as you have a working Internet connection.

  • Advanced trading platforms – Directly related to technology is the coming of advanced trading platforms such as MetaTrader4 (MT4), which gives traders seamless access to global markets. Most online trading platforms have a wide range of features and capabilities that allow you to trade indices at the click of a mouse.

  • More educated traders – There’s no doubt that traders have more access to information, market trends and opportunities these days. Whereas before traders tend to limit their focus on equity markets, many traders are now looking to diversify and take advantage of price movements in other instruments such as indices.

  • Long trading hours – Most global indices remain open for trading outside the regular market hours. And the fact the various indices operate in different time zones means you can have trading opportunities almost 24 hours a day. Whether you want to trade the Asian indices during their day and catch the European or US indices later on, or vice versa, you have more opportunities when you are trading index CFDs.

  • Leveraged trading – Trading Index CFDs is done on margin, which means you only put a fraction of the trade size upfront to open an Index trade. You can trade most global indices at 100 to 1 leverage which means 1% margin is required to control the total position.

  • Trade long or short – The fact you can trade indices short or long makes them an attractive proposition to many traders. And why not? This means you can take advantage of price movements whether the markets are going up or down. In this sense, you can use Index trading as a hedging strategy or for directional trading as well.

What are the most popular indices to trade?

Across the globe, you can access the different indices that provide ongoing trading opportunities, liquidity and diversification.

Here are the major global indices available at Synergy FX and the code we use on the MT4 platform.

  • US – Dow Jones Industrial Index (DJ30), Nasdaq 100 (NAS100), S&P500 (US500 Index)
  • Europe/ UK – DAX 30 (GER30), FTSE100 (UK100), Euro Stoxx 50 (STOXX50)
  • Asia – Nikkei225 (JP225), Hong Kong 50 (HK50), China A50 Index (CHINA50)
  • Australia – S&P ASX 200 index (AUS200)

Why Synergy FX ?

Benefits of Trading Index CFDs

Index trading carries a lot of benefits. Whether you are new to trading who want to explore the different markets before deciding on which one to focus on, index trading can give you that exposure to a wide range of markets.

If you are an active trader looking to expand your trading portfolio, index trading can provide the diversity whether you’re mainly trading equities, commodities, Bitcoin or forex.

And if you are an advanced trader in search of new strategies, index trading can be used as a hedging tool to protect your portfolio and to enhance your overall diversification.

How to trade indices?

Using the SynergyFX trading platform, you can trade the different indices to take advantage of trading opportunities around the world.

Open an account and you can start your index trading today.

TRADING INDEX CFDs WITH SYNERGY FX INCLUDES:

  • Compliment with all 40 + FX Currency Pairs and Global Indices
  • Trade around the clock with only short minute session closes
  • Low minimum trading volumes starting from 0.01 lots
  • Tight spreads and fast trade execution

Start trading Index CDFs today by opening a live or demo MT4 trading account.

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