SP 500 - Standard and Poor's 500 Index

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

The SP 500 just like the Dow Jones Industry Average Index is more volatile than most of the other Top Traded Stock Index, The SP 500 index will over the long term trend upwards but it'll have more pull backs & more consolidations than other stock index. Traders may prefer to trade other stock indexes other than this one if they are more accustomed to trading the more stellar trends found in other top indices.

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

SP 500 Stock Indices - SP 500 Stock Indices Defined

The SP 500 Chart

The SP 500 trade chart is displayed & shown & displayed above. On example above this instrument is named as US500CASH. As a trader you want to find a broker that provides SP 500 chart so that you as a trader can begin to trade it. Stock indices example displayed above is of SP 500 on MetaTrader 4 Forex and Platform.

Other Information about SP 500 Stock Index

Index Symbol - SP 500:IND

The 500 constituent stocks which constitute SP500 are selected from the major industries in US economy. The calculation of this index is however different compared to other Indices: the price constituent of the 500 stocks also has a weighting component that makes this stock index more volatile than others.

Strategy of Trading SP 500 Stock Index

SP 500 recipe of calculating makes it more volatile & therefore there are much more wider swings in the price movement of this stock index. Although this index generally moves upward over the long term because US economy also shows strong growth and is also the largest 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 index moves upwards. When America economy is performing good (most times it's performing good) this upwards trend is more likely to be in-favor. A good indices trade strategy would be to buy dips.

During Economic Slow-Down & Recession

During economic slow-down and recession times, companies begin to report lower profits & lower business growth prospects. It is due to this reason that traders begin to sell stocks of companies which arereporting lower profits & therefore index tracking these particular stocks will also start to move downward.

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

Contracts & Details

Margin Requirement per 1 Lot - $ 12

Value per 1Pip - $ 0.1

NB: Even though general trend is generally moves upwards, as a stock indices trader you have to factor in daily market volatility, on some days the index might oscillate or even retrace, market pull back may also be substantial at times and therefore as a trader you need to time your trade entry precisely using this trading strategy: trade strategy & at the same time use proper money management rules just in case of more unexpected volatility in the market movement. About equity management rules in index topics: What is stock index equity management and stock index money management methods.

Get More Topics & Lessons: