Here are answers to some of the most frequently asked questions about trading stock index CFDs. If you can't find what you're looking for here, please refer to the stock indices contract details.
What are stock indices?
A stock index is a statistical indicator measuring the combined value of underlying stocks within a section of the stock market.
There are a number of different types, including global, national and sector-specific indices. They move higher or lower based on investor reactions to a number of factors, such as a company reporting updates or economic performance announcements. A change in the value of any individual stock in an index will be reflected in a change of the overall value of that index.
We offer a huge range of indices to trade CFDs, including the Australia 200, FTSE 100, US SPX500, Wall Street and Japan 225.
Who trades CFDs on stock indices?
Depending on their individual goals, CFD traders will trade stock indices in different ways. If participants are looking for quick returns they can employ short-term CFD strategies, placing positions on the current direction of the market. Others who have a longer-term view can place a CFD trade on the value of the stock index at sometime further away in the future, often a few months ahead.
CFD trading on indices gives exposure to a diversified range of stocks as opposed to picking individual stocks, thereby providing broader market exposure. A stock index will never go bust or be subject to a takeover bid, plus your potential risks and rewards are not tied to just one company’s fortunes.
It’s important when CFD trading on stock indices to keep up-to-date with the latest financial news and economic updates, as they can often affect how the market moves. IG Markets offers a comprehensive package of Market Research resources, including free daily commentary, analytical tools and regular economic news updates.
How do stock index CFDs work?
Once you know which stock index you would like to trade as a CFD, you simply check our current price and either ‘buy’ at the offer price, or ‘sell’ at the bid price.
IG Markets also offers you the unique opportunity to trade some of the world’s major indices in Australian dollars including the FTSE 100, Wall Street, Germany 30 and Japan 225. Our AUD denominated index contracts avoid the currency risk that can arise with traditional index trading.
To develop a better understanding of how stock indices trading works, take a look at our index trading example.
What are the advantages of CFD trading on stock indices?
- Tight spreads, including a 1-point spread on our Australia 200 cash index during market hours
- Our browser-based PureDeal platform combines reliability and immediate execution
- 24-hour trading across a huge variety of popular indices and other markets
- A range of Order types that enable you to manage risk and protect profits
- Access to the latest commentary from our experts to help keep you informed
- A comprehensive pro-level charting package, which includes pattern recognition software