WHAT IS INDICES?
An index is a basket of company shares listed on the same exchange together. The best examples for indices would be The Dow Jones (Boeing, Microsoft, Nike) or German DAX index (Adidas, Volkswagen).The German DAX index is made up of 30 businesses: including German car maker Volkswagen, sporting goods company Adidas, the Deutsche Lufthansa airline, the Bayer pharmaceutical company and the Allianz insurance firm. Instead of investing in these companies’ shares separately, you speculate the price change of a basket that contains all these companies. Naturally, the biggest company in a basket has the largest impact on the overall index valuation.
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Why trade Indices?
Stock indices are quite popular among CFD traders. They enable you to invest in an economy's opinion on a basket without having to select individual stocks. An index group comprises of prices shared by various businesses, creating a stock collection. Thus, the prices can be affected by a lot of variables such as major political events, major industry changes and significant fluctuations. This provides volatility and exciting opportunities for traders.
Also, investing in a diverse portfolio of multiple industries can be more beneficial than investing in a single company. If the share prices of listed companies rise, their indices rise in value as well! The increase is calculated based on a company’s share value. The more a company is worth, the more its share price will affect the index as a whole. However, bear in mind that the index prices do not always go parallel with the top stock in the basket.
Why trade Indices with SEA Investing?
- Access Major Indices: SEA Investing clients have no restrictions trading major indices.
- Easy-to-Predict Trends: Indices usually follow stock market price moves, maintaining trends
- Simpler Trading: Tracking less companies makes it easier to create your strategy
With SEA Investing you get the diversity of trading a select list of multiple companies and indices around the world. You can profit by both buying from rising markets or from falling markets by short selling the indices.
SEA offers a free Demo Account with helpful tools to aid new traders test their strategies with indices. Check our Research & Education section to learn more about them.