SP 500 - Standard and Poor's 500 Index

Standard & Poor's 500 is a stock index that tracks capitalization of the 500 stocks which represent major industries in American economy. The list of 500 companies is made up of stocks illustrated & 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 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 indices 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 Index - SP 500 Index Defined

The SP 500 Chart

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

Other Information about SP 500 Index

Index Symbol - SP 500:IND

The 500 constituent stocks which constitute SP500 are chosen 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 got a weighting component that makes this stock index more volatile than others.

Strategy of Trading SP500 Index

SP 500 recipe of calculating it 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 and robust growth and is also the largest economy in the globe.

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 doing good (most times it's performing good) this upward 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 growth prospects. It is due to this reason that traders begin to sell stocks of companies which are reporting and recording lower profits & therefore index tracking these particular stocks will also start to move downward.

Hence, during these times stock index trends are much more 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 1 Pip(Point) - $ 0.1

NB: Even though general trend is in general moves upwards, as a stock indices trader you've got to factor in daily market volatility, on some days the index might oscillate or even retrace, market pull back may also be substantial sometimes and therefore as a trader you need to time your 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 & stock index money management methods.

Get More Topics and Tutorials: