S and P 500 - Standard and Poor's 500 Stock Index

Standard and Poor's 500 is a stock index that tracks capitalization of 500 stocks that represent major industries in American economy. The list of 500 firms is made up of stocks shown in NYSE and NASDAQ.

S&P 500 just like the Dow Jones Industrial Average Stock Index is more volatile than most of the other Top Indices, The S&P 500 index will over the long-term trend upward but it will have more price pullbacks & more consolidations than other stock index. Traders may prefer to trade other stock index other than this one if they are more accustomed to trading the more stellar trends that are found in other top indices.

One of the reason this stock index has more oscillations than other index is because it has more constituent stocks than other stock index. This index also has a weighting factor in its calculation which also contributes to making it more volatile.

US500 Strategy Guide - US 500 Tutorial Guide Strategy

The S & P 500 Chart

S&P 500 trading chart is shown & illustrated and shown above. On the example above this instrument is referred to as as US500CASH. As a trader you want to find a broker that provides S&P 500 trading chart so that you can begin to trade it. The example That is shown above is that of S&P 500 on MT4 FX and Platform Software.

Other Information about S and P 500 Stock Index

Official Stock Indices Symbol - US:IND

The 500 component stocks that make up the S&P 500 are selected from the major industries in American economy. The calculation of this index is however different compared to other Indices: the price components of the 500 stocks also has a weighting factor that makes this stock index more volatile than others.

Strategy for Trading S & P 500 Stock Index

S&P 500 technique of calculating makes it more volatile & hence there are more wide swings in the price movement of this index. Although this index in general moves upwards over the long-term because American economy also shows strong growth & is also the biggest economy in the world.

As a trader wanting to trade this stock index, be prepared for wider price swing & a little more volatility.

As a trader you want to be biased & keep buying as the index moves upward. When America economy is doing well (most of the times it is doing well) this upward trend is more than likely to be ruling. A good stock index trade strategy would be to buy the dips.

During Economic Slow-Down and Recession

During economic slow-down & recession times, firms start to report lower profits & lower business growth prospects. It is because of this reason that investors start to sell stocks of companies that arereporting lower profits & hence index tracking these particular stocks will also start to move downward.

Therefore, during these times, market trends are likely to be moving downward & as a trader you should also adjust your trading strategy accordingly to fit the prevailing downwards trends of the stock market index that you are trading.

Contracts and Specs

Margin Requirement Per 1 Lot - $ 12

Value per 1Pip - $ 0.1

NB: Even though general trend is generally moves upward, as a stock indices trader you have to factor in daily market volatility, on some days the index might move in a range or even retrace, market retracement may also be significant at times and hence as a trader you need to time your trade entry precisely when using this trade strategy: Indices trade strategy & at the same time use proper equity management principles just in case of more unexpected volatility in the market. About equity management principles in index lessons: What's money stock indices management & stock indices equity management methods.

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