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Trading Indices with CFDs

CFDs allow you to take a position in many products and mainly informs you about CFDs actions but you’ll also invest available market indices like the CAC 40 or the Dow Jones .Trading Indices with CFDs.

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If you generally think that the stock exchange goes to rise or fall soon, it’s going to be more interesting to trade indices because a stock can sometimes turn the other direction of the market following good / bad news.

The system of CFDs on indices is essentially an equivalent as for stocks, you purchase a CFD contract and sell it as soon as you would like . in order that you’ll see more clearly, we’ve prepared an example of Trading on an index.

What is a stock exchange index?

A stock exchange index groups together stocks from an equivalent country or maybe an equivalent sector. for instance , the Cac 40 brings together the 40 largest French market capitalizations. stock exchange indices are numerous with the Dow Jones , the Nasdaq, the CAC 40, the Dax etc. There are dozens of them .

Trading indices with CFDs

You can trade indices for the future , otherwise you can do day trading (buy the index and sell it on an equivalent day). because of CFDs it’s extremely simple , you’ll enjoy dividends, you’ve got no commissions and in particular you’ll not be forced to take a position large sums because of the leverage effect.

Example of trading on an index

You want to require an edge on an index that we’ll call “European Index” for the instance , thinking that the worth will go up.

You buy 1 European Index CFD = 5 € (each quotation point is like 5 €) at the worth of 3800 points .

Remember that you simply can keep your CFD contracts as long as you would like , there’s no expiration date, unlike other derivatives!

Several hours pass and therefore the European Index has climbed well, as you expected, the worth is currently at 3830 points , you sell your European Index CFD. You earn € 150 (30 points x € 5) .

If, on the opposite hand, the ecu index has fallen and is found at 3780 points for instance , you purchased at 3800 points so you’ll lose € 100 or 20 points by selling your position..