S and P 500 - Standard and Poor's 500 Stock Index
Standard and Poor's 500 is a stock index that tracks the capitalization of 500 stocks that represent major industries in the America economy. The listing of 500 firms is made up of stocks listed in the NYSE and NASDAQ.
S&P 500 just like the Dow Jones Industrial Average Index is more volatile than most of the other Top Stock Indices, 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 trends that are found in other top stock indices.
One of the reason this index has more oscillations than other indices is because it has more constituent stocks than other indices. This index also has a weighting factor in its calculation which also contributes to making it more volatile.
The S & P 500 Trade Chart
S&P 500 trading chart is shown and shown above. On the example above this 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 can begin to trade it. The example That is shown above is that of S&P 500 on the MT4 FX and Platform Software.
Other Trading Information about the S and P 500 Stock Index
Official Indices Symbol - SPX:IND
The 500 component stocks that makes up the S&P 500 are selected from major industries in the America economy. The calculation of this stock index is however different compared to other Stock Indices; the price components of the 500 stocks also has a weighting factor that makes this index more volatile than others.
Strategy to Trading the S and 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 moves up over long-term because the America economy also shows strong growth & is also the biggest economy in the world.
As a trader wanting to trade this index, be prepared for wider price swing & a little more volatility.
As a trader you want to be biased and keep buying as the stock index moves up. When the 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 dips.
During Economic SlowDown and Recession
During economic slowdown and recession times, firms begin to report lower profits and lower growth prospect. It is because of this reason that investors begin to sell stocks of companies reporting lower profits and therefore the stock index tracking these particular stocks will also begin to move downwards.
Therefore, during these times stock indices trends are likely to be heading downward and as a trader you should also adjust your strategy accordingly to suit the prevailing downwards trends of the stock market index that you are trading.
Contracts & Specs
Margin Required Per One Lot - $ 12
Value per 1Pip - $ 0.1
NB: Even though the general trend is generally upwards, as a trader you have to factor in the daily market volatility, on some days the stock index might move in a range or even retrace, stock market retracement might also be significant at times and therefore as a trader you need to mark-time your trade entry precisely using this trade strategy: Stock strategy and at same the time use proper money management rules just in case of more unexpected volatility in the market. About money management rules in index topics: What's stock index money management & stock index money management methods.
