Indices trading: how to trade on indices
Published on: 23/12/2021 | Modified on: 19/08/2022
Indices trading is a popular strategy for many traders and investors who are looking to gain exposure to an entire market, investment theme or sector. In this guide, we highlight the most popular across the world and explain how you can spread bet or trade CFDs on derivative instruments that are based on major indices such as the FTSE 100 and more.
- Indices can be categorised by market cap, sector, theme, region or asset class
- They can help to diversify a trader’s portfolio as risk is spread across multiple stocks
- The UK’s benchmark index is the FTSE 100, which measures the top companies in the country by market capitalisation
- Other major world indices include the S&P 500 (US), DAX (Germany), Nikkei 225 (Japan) and Hang Seng (Hong Kong)
- You can’t invest directly in indices but instead, you can trade derivative instruments based on the original index or exchange-traded funds that track the same stocks