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

Standard and Poor's 500 is a index that tracks the capitalization of 500 stocks which represent major industries in the America economy. The listing of 500 firms is made up of stocks listed in the NYSE & NASDAQ.

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

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

S & P 500 Index

The S & P 500 Chart

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

Other Info about the S & P 500 Index

Official Index Symbol - SPX:IND

The 500 component stocks which makes up the S&P 500 are chosen from major industries in the America economy. The calculation of this stock index is however different compared & analyzed to other Index: the price components/constituents of the 500 stocks also has got a weighting factor that makes this stock index more volatile than others.

Strategy to Trading the S & P 500 Index

S&P 500 method of calculation makes it more volatile and hence there are more wide swings in the price movements of this stock index. Although this stock index in general moves upwards over long-term because America economy also shows strong and robust growth and is also the biggest/largest economy in the world.

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

As a stock index trader you want to be biased and keep buying as the stock index moves and heads upwards. When the America economy is doing well (most of the times it is doing well) this upward market trend is more likely to be the one present. A good stock indices trading strategy would be to buy dips.

During Economic SlowDown and Recession

During economic slowdown & recession times, companies begin and start reporting slower revenues, lower profits and lowers growth prospects. It is because of this reason which investors begin to sell stocks of corporations reporting lower profits & therefore the stock index tracking these particular stocks will also start to move downward.

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

Contracts and Specs

Margin Required Per 1 Lot - $ 12

Value per 1 Pip(Point) - $ 0.1

NB: Even though the general trend is in general move upwards, as a trader you've got to factor in the daily market volatility, on some days the stock index may move in a range or even retrace, stock market retracement might also be substantial some times and hence you as a trader you need to time your entry precisely using this trading strategy: Stock strategy & at same the time use suitable/proper money management principles & guidelines in case there's unexpected market volatility. About equity management guidelines and rules in index lessons: What's stock index equity money management guidelines/methods & index equity management strategies.

Study More Tutorials & Tutorials: