In finance, stock market indices track the collective market performance of a pool of equities over time. An index will typically seek to represent large, medium or small-cap stocks for a country or a region. A stock index CFD (Contract for Difference) allows you to speculate on the price movements of these baskets of shares without owning the underlying equities, and makes participating in index trading more accessible.
- Trade risk sentiment
- Dilute the risk of stock-surprises
- Hedge a portfolio or equity
- Highly liquid instruments
Yes, you can trade our indices long (bullish) or short (bearish) to benefit from rising and falling markets.
Our CFD indices are derived from cash market prices. Please see our Trading Hours Table for more detailed information.
Indices trade in the currency of the country their exchange is listed in. For example, the FTSE 100 trades in GBP, DAX in EUR, S&P 500 in USD, ASX 200 in AUD and Nikkei 225 in JPY.
Yes, our index CFDs are leveraged, which means margin requirements are lower to initiate a trade at a fraction of the cost of the market.
Yes, you can do both. You can enter long or short the same index to partially or fully-hedge that trade. But you could also ‘pair trade’ indices by going long one index and short another, to create a spread trade (or pairs trade) strategy.
The most actively traded stock indices often include major global benchmarks like the US500 (S&P 500), DAX40 (German 40), and JP225 (Nikkei 225). Their popularity for index trading stems from their high liquidity, broad market representation, and consistent responsiveness to economic news and global events.
The best time to trade indices generally aligns with the opening hours of their underlying exchanges. These periods often offer the highest liquidity and volatility, leading to more significant price movements and opportunities for index CFD trading.
Commonly used technical indicators for index trading and index CFD trading include Moving Averages (to identify trends), the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) for momentum, and Bollinger Bands to assess volatility. These tools help traders analyse price action and make informed decisions.
The primary difference between index CFDs and stock CFDs are their underlying assets. An index CFD allows you to speculate on the overall performance of a basket of companies. In contrast, a stock CFD allows you to speculate on the price movement of a single company’s shares.
In index CFD trading, leverage allows you to control a significantly larger position with a relatively small initial margin deposit. For example, with 1:20 leverage, you can control a $2,000 position with just $100. While this can potentially increase profits, it can also increase potential losses.