Trade Stock Indices

S&P ASX 200 Trading Guide and Strategies

Strategies for Trading the S & P ASX 200 Index - Understanding the S&P ASX 200 Index

ASX200 Chart

The ASX200 chart appears above. In this display, the tool is named AUS200CAS. Seek a broker that provides ASX 200 charts to start trading it. The example shown is ASX200 on MetaTrader 4 Forex and stock index software.

Strategy to the ASX 200 Index

The ASX200 index generally exhibits an upward tendency since stock valuations inherently appreciate over time. This index typically trends higher over the long term, supported by the overall strength and resilience of the Australian economy, which is underpinned by its mining sector possessing extensive reserves of Gold and other valuable resources.

If you're a trader hoping to trade this stock index, the index is expected to climb upwards at a faster pace when the Australian financial figures point to increased economic growth.

As a Stock trader, you should lean towards buying as the stock index goes up. When the Australian economy is doing well (which it often is), this upward trend is more likely to be happening. A good index trading plan would be to buy when the market dips.

During Economic SlowDown & Recession

When the economy slows down or goes into recession, companies start to report that they are making less money, their profits are lower, and they don't expect as much growth. Because of this, traders begin to get rid of shares in companies that are not making as much money, and the index that follows these shares also starts to go down.

Consequently, during these periods, index trends are significantly more likely to exhibit a downward bias, and you, the trader, must correspondingly adapt your strategy to align with the current downtrend observed in the specific stock market index you are actively trading.

Contracts and Details

Margin Required Per 1 Lot - AUD 70

Value per 1 Pip(Point) - AUD 0.1

Please note: While the overall trend generally moves upwards, as a stock index trader, it is crucial to consider the daily market price volatility. On certain days, the index may fluctuate within a range or even experience a pullback. Stock market pullbacks or retracements can sometimes be significant, which necessitates that you, as the trader, time your entries meticulously using this strategy: index trading strategy. Additionally, it is important to implement proper money management guidelines and principles to mitigate the impact of unexpected market volatility. Regarding money management guidelines in index lessons: What are index equity management and stock index equity management strategies?

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