You can go long or short –
With Indices Trading, you can go both long and short while trading. If you think the price of an index will increase, you can go long and even in a bearish market, you can go short and make profits.
You can hedge your existing positions –
When you have a collection of shares, one example of hedging your position is to go short on an index to protect yourself from losses in your portfolio. So, if the market goes down and your shares start to lose value, the short position on the index will increase in value – balancing the losses from the stocks. However, if the stocks increased in value, the short index position would offset a proportion of the profits which had been made.
You can trade with leverage –
When you trade CFDs you can get the advantage of leverage. This means you need only a small initial deposit – known as margin – to open a position that gives you much larger market exposure.
However, when trading with leverage, you must remember that your profit or loss is calculated using the entire position size, not just the initial margin used to open it.
How can you Trade Indices?
Indices are traded as CFDs (Contract for Difference). This means you don’t take ownership of the asset but simply trade the price movements.
There are two main types of indices you can trade with STARTRADER:
Index Cash CFDs-
Index cash CFDs are preferred by traders who have a short-term outlook, such as day traders – because they have tighter spreads than index futures. They are traded at the spot price.
Index Futures CFDs-
With a contract based on a price for future delivery, Index Futures CFD trades are preferred by traders interested in medium to long-term investments.
To explore our offerings and start trading, click here.