How to Trade Indices
Gain exposure to full economies and industries when you opt to trade index CFDs. At Tradu, we can give you access to these and more through a single position.
To find out more about how to trade indices, we've created a guide that will tell you everything you need to know.
Indices trading: read our guide
How to begin trading indices
Are you expanding your portfolio and dipping into indices for the first time? Or do you simply want to speculate on price movements without owing the underlying assets of an index? Maybe you're new to the markets and want to learn how to trade indices like a pro. Wherever you are in your trading journey, we have the tools to get you to where you want to be.
Ready to trade with real money? You can open a live account and add the funds you're going to invest. However, before you jump in, you must understand the different ways to trade indices.
What are the ways to trade indices?
Begin trading indices by looking at the different ways to approach this market. The method you choose will depend on what works best for you as you develop your trading style. Please note that you cannot trade cash indices, index futures or options with Tradu and these have been included for informational purposes only.
Cash indices
Cash indices are a type of spot trade. Here, trades are made at the current market value of the underlying indices. The spreads are tighter than index futures because there are no expiry dates with this type of trade.
As with spot trading across other markets, this type of trade is suited to investors looking to take a short-term position. Day traders tend to opt for cash indices, closing their positions when the trading day is over. They will then open new positions the next day to avoid paying overnight charges.
Index futures
Futures give traders who are investing in indices the chance to buy or sell at a set price on a set date in the future. These are derivatives that allow traders to speculate on how prices across indices such as the S&P 500, Dow Jones Industrial Average and NASDAQ 100 will perform.
You can trade indices futures when considering how to hedge against any losses in stocks within your portfolio.
Index options
Options are derivatives that give traders the chance to buy or sell an index at a set price on a set date – or within a date range. There is no obligation to trade, however.
Index options are cash settled when the trade is complete and, as there is no underlying stock to be transferred, they are popular among traders who want to take positions without owning anything when the trade is closed.
Index CFDs
An index contract for difference (CFD) is an agreement to exchange the difference in the price of the underlying asset between opening and closing the contract. The contract is between you and Tradu as your broker.
Index CFDs are attractive to traders as they allow for speculation on rising and falling prices without a requirement to own the underlying asset. Instead, CFDs follow the way the prices move and traders make a profit if they predict them correctly. It's possible to go long, which is to buy the index price when you think it will go up, or short, which is where you sell as you think the price will go down.
This is a leveraged product, so you can get market exposure for a small initial deposit which is known as the margin. At Tradu, we can help you discover how to trade index CFDs.
Learn more in our CFD trading guide.
Discover how to trade indices with Tradu
If you want to know how to trade indices, we make it easy:
- Open an account: If you're ready to trade, sign up for a Tradu account in no time.
- Learn the ropes: Our trading, market and platform guides are there to talk you through every stage of the process, whether you're looking at indices or expanding your portfolio with crypto and stocks.
- Create a strategy: Build a plan that works for you and helps you discover how to trade indices profitably. However there are equal possibilities of losses as well.
- Get insights from the experts: We deliver real-time updates, making it easy for you to find out when to trade.
- Develop: Once you know how to trade in indices, expand your portfolio with other financial markets such as listed stocks, CFDs on stocks, crypto and commodities with your Tradu account.
Now you know how to trade indices like a pro, read our other guides.
How are indices constructed and calculated?
What drives index prices?