WHY SHOULD YOU TRADE INDICES?
With physical shares you need a decent amount of capital to trade the blue chips of the world. Imagine buying shares in companies like Apple which are around to $177 per share. If you wanted to trade that for a quick gain you would need to trade nearly $2000 and expect it to move 10% to make just $100 from it. However, if you trade indices you can trade the top stocks in the market with only a small outlay.
With CFD trading, you would only have to deposit a small percentage of the total trade value whilst being able to maintain the same level of exposure. You believe the Australia 200 will rise and decide to buy 10 CFDs at a price of 4000. Over the course of the week the Australia 200 goes on a nice run up due to a majority of the blue chip sectors releasing great end of year results. Our new price of the Australia 200 CFD is 4010/4011. Having reached your profit target, you decide to close your position by selling 10 CFDs at 4,010 (our sell price).
The opening (notional) value of the CFD trade is $40,000 (10 CFDs x 4010). The closing (notional) value of the CFD trade is $40,100 (10 CFDs x 401). This nets you a $100 gain ($40,100 – $40,000).
If however, the price of the Australia 200 had fallen to 3990, you would have lost $100 (4000-3990 x 10 CFDs). In your opinion, if you think the market will rise or if you think the market will fall you can still trade the markets. Hedging is an option during uncertain times. When the market falls people with a share portfolio for example tend to panic. However, some will trade CFD’s indices to hedge their share exposure. As the market is going down you will sell a small amount of contract and for every point that it moves you will start making money which means you are covering your short-term losses on your shares.
Klimex Capital Market Indices
|CONTRACT||PLATFORM SYMBOL||TYPE||MARKET||VOLUME||VALUE/ PER TICK||E.G FOR TICK VALUE PER TICK||1 % MARGIN||MAX LEVERAGE||MIN VOLUME||MAX VOLUME|
|ASXS&P 200(Future)||SP1200||CFD||SFE/ASX||1||AUD$1||6231-6232||1% x (1 x market price)||100:1||1||500|
|FTSE 100(Future)||FTSE100||CFD||LIFFE/Euronext||1||GBP1||4652>4653||1% x (1 x market price)||100:1||1||500|
|DAX30(Future)||DAX30||CFD||Eurex||1||EUR1||5217>5218||1% x (1 x market price)||100:1||1||500|
|Dow Jones30 (Future)||DJ30||CFD||CBOT/CME||1||USD$1||12370>12371||1% x (1 x market price)||100:1||1||500|
|S&P (Future)||SP500||CFD||CME||1||USD$1||1262.5>1263.5||1% x (1 x market price)||100:1||1||500|
|Nikkei225 (Future)||Nikkei225||CFD Asia||Simex||50||JPY50||3472>3473||1% x (1 x market price)||100:1||50||20000|
|USD Index (Future)||USDX||CFD||ICE||1||USD$1||85.750>85.760||1% x (1 x market price)||100:1||1||500|