Indices | Stock index

Instrument name Minimum trade size Margin requrement per min trade size Typical AGM spread Minimum stop distance (points)
USD GBP EUR
USD30 1 90 60 60 4(6) 0.1
SPX500 1 120 75 80 0.5 2
NAS 1 25 17.5 20 2 4
UK100 1 90 60 60 1(2) 4
GER30 1 90 60 60 1(2) 5
ITA40 1 250 160 170 10 20
ESP35 1 200 125 140 8 12
FRA40 1 60 40 40 1(2) 5
HKG33 10 750 450 525 15 25
JPN225 100 150 90 100 10 25
SWE30 1 90 90 90 0.5 1
SUI30 1 90 90 90 4 6
AUS200 1 60 40 40 1(2) 7
EUSTX50 1 80 70 70 2 4

Introduction

A stock index is a weighted benchmark used in measuring the performance of an entire stock exchange or a sector of a stock market. The value of a stock index is calculated on the basis of a change in the price of the stock assets listed in a particular sector or a particular exchange being measured. For instance, the value of a stock index such as the Nikkei 225 in Japan is a function of the change in prices of the stocks of the 225 largest companies in the Japanese stock market.

What makes stock indices tradable is the fact that the change in price of the component stock assets produces a change in the value of the index, and this intraday volatility can then be used by traders to setup long and short trades on specific indices.

Clasification of Indices

Stock indices are of various types. An understanding of the classification of stock indices give an idea of the component stocks that the index measures. It also helps the trader understand the very nature of the component indices. Stock indices are classified into the following categories:

Understanding How to Trade Indices on AG Markets

For each listed index asset, traders will find the following information:

  • A Name of the instrument
  • B Minimum trade size (in lots)
  • C Margin requirements for the minimum lot size (shown for accounts denominated in Euros, GBP and US Dollars)
  • D Target spread for the asset
  • E Minimum stop distance (i.e. minimum number of points that can be set as the stop loss)

It is important that traders understand these contract specifications so as to know how to set the trades. Let us use an example from the Dow Jones Industrial Average index asset, which is listed with symbol name US30.

The minimum trade size will be 1 lot, requiring a margin of at least $90 for the trade if the account is USD-denominated. Target spread is 4-6 pips, while traders must use at least 6 pips as stop loss.

For the Hang Seng index (listed as HKG33 on AG Markets), the minimum trade size is 10 lots, with a margin requirement of at least $750 for the trade. The target spread is 15 pips, while the minimum stop loss distance is set at 25 pips.

For more information about trading conditions and CFD rollover calculations


Other Points to Note

In order to commence trading the CFD stock indices on AG Markets, the trader is expected to open a trading account with a minimum amount of 250$. This ensures that the trader has enough margin to cover any positions taken in the market. It must also be remembered that even though stock index futures can be traded round the clock, the most active market period for each index is when the underlying stock exchange being measured is open. This is when the maximum volatility occurs, creating trading opportunities for market participants.

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