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Indices Trading

An index trader’s objective is to make a profit from the price movements of a particular index. This is called Indices trading.

There are many indices available for trading. Below we mention the most popular indices. They measure the performance of the stock market of various markets.

It is not actually possible to buy or sell an index like you would a stock or commodity, as they are indicators of the specific price movements of several assets that make up the index and have no actual physical basis to trade. Instead, indices traders use derivatives like CFDs to speculate on the movements of various indices.

NASDAQ 100 – Instrument code on Khwezi (NASUSDk)

The NASDAQ is the second largest exchange in the world after the New York Stock Exchange. The NASDAQ 100 however is a stock market futures index made up of 103 non-financial companies. It is a modified capitalization-weighted index meaning that the stocks weights in the index are based on their market capitalizations. Six companies make up 45% of the weighting Apple (13.3%) Microsoft (10.9%) Amazon (10.8%) Google (6.8%) and Tesla (3.8%) this is the reason that Nasdaq has sharp moves up and down as news hits the markets on these tech giants.

Should I trade the Nasdaq 100 Index? 

NASDAQ is one of the most traded indexes in the Financial Market amongst retails traders, which makes the volatility behind it appealing. NASDAQ has, on its listings, over 3000 of the top companies in the US, ranging from tech companies all through to media companies. The market forces behind NASDAQ is substantial because of the above-mentioned popular status amongst traders, and because of the impulsive movements it can generate.

What is the best strategy for trading the Nasdaq 100 Index?

With NASDAQ being influenced by minor / major fundamentals and technical, it makes the index very appealing to all types of traders (whether you are scalping or swing trading). NASDAQ tends to respect technical levels and trends strongly when market forces support the movements and sentiment. A potential strategy would be a trend trading strategy involving support / resistance and Fibonacci ratios. Indicators or oscillators such as the stochastic and moving averages would be beneficial to trade within this index, but chart reading should be your top priority when analysing this instrument as the market moves quicker compared to the lagging calculation of the above-mentioned indicators / oscillators.

 DOW30 – Instrument code on Khwezi (DOWUSDk)

The Dow jones industrial average was initially published by two wall street journalists Charles Dow and Edward Jones. The Dow 30 is a price-weighted average index consisting of 30 significant stocks listed on US stock exchanges. The value is made up by adding all 30 stock prices together and dividing by a set factor which is 0.152 as of September 2020.  The Index moves as the stocks move on performance and economic events; it is worth using the Dow as a quick glance tool in order to see what is happening in the stock markets. However, it is Important to note that it is represented by powerful corporations and does not necessarily reflect what is going on at street level.  

S&P 500 – Instrument code on Khwezi (SPXUSDk)

The S&P is a stock market index that tracks the performance of 500 of the largest publicly listed companies on US Stock exchanges, to be one of the 500 a company’s the market cap must be greater than $8.2Billion. Like the Nasdaq I the S&P is a capitalization- weighted index so it is strongly influenced by the giants, 26% of the index is taken up by 10 companies. They are in order of the biggest weighting down to 10th largest. Apple, Microsoft, amazon, Google, Facebook, J&J, Berkshire Hathaway, Visa, P&G and JP Morgan Chase

FTSE 100 – Instrument code on Khwezi (100GBPk)

The Financial Times Stock Exchange 100 Index commonly known as FTSE comprises of the top 100 London Stock Exchange stocks with the highest market capitalization. The LSE is a very closely watched and heavily traded market and this makes the FTSE news sensitive and worth following and trading. When trading the FTSE it’s important to note that it often moves with movement in the GBP/USD as 80% of the 100 companies are multi nationals that benefit if the Pound weakens. 

DAX 30 – Instrument code on Khwezi (G30EURk)

DAX30 index is a stock market index that tracks the price performance of the 30 largest German companies, traded on the Frankfurt stock exchange they are chosen i in terms of order book volume and market capitalisation. The Dax consists of a broad range of stocks ranging from financial, manufacturing to consumer goods. The most valued company is SAP with a market cap of 150 billion Euros, Adidas Siemens Volkswagen and BMW are a few of the other counters that make up the DAX 30.  

List of additional Indices on Khwezi Trade MT4 platform

  • HK50k 
  • 200AUDk 
  • 225JPYk 
  • E50EURk 
  • ES35k 
  • F40EURk 

***The above cannot be seen as advice and is for information purposes only.