About Indices

Indices Trading is a term that is commonly used by indices investors & stock traders to describe trading activity in the trading market that is carried out by traders, investors and speculators.

In indices trading a trader can buy or sell indices. A trader will buy indices if they think the value of the indices instrument is likely to appreciate in the future. A Trader will sell indices if they think the value of the indices instrument is likely to depreciate in the future.

The Indices Trading Market is an over the counter market which means trading is carried out through a network of the big international banks; this indices trading network is commonly referred to as the interbank network. This interbank indices trading network consists of banks and brokers which are in different locations. These interbank network is responsible for providing the trading prices at any particular time to the traders and other market participants who want to buy or sell indices. In indices trading the trading price is constantly changing and this trading price is denoted by what is known as a Indices Trading Quote. In Indices Trading the Indices Price is displayed as a Indices Quote. This indices trading quote is constantly changing and the interbank network will update automatically the current indices trading quote and stock traders can then trade the stock indices at the current trading price.

Indices Trading Quotes

Trading trading prices of indices trading instruments is displayed using Indices Trading Quotes. This is the trading price at which any trader wanting to trade indices will trade at.

Because trading prices are constantly changing it means that stock traders can take advantage of these trading price movements to make profits by trading these trading price movements. The trading price of any indices trading instrument will keep moving because of demand supply. This is because there are many participants trading indices instrument in the open market and therefore this means that the trading price quotes will get determined by the current market forces. These market forces may be determined by factors such as an increase in demand for indices.

Indices Trading Pips

In indices trading the trading price moves are measured in points commonly known as Pips in the trading market. The pip is used to calculate the profit or loss that a Indices Trader makes in a particular trade. For example if a trader makes a trade which moves 50 pips in his direction, then the profit of the trader will be calculated as 50 indices trading pips. Pip in indices trading is represented as the second last decimal point in the Indices Trading Quote and it is made up of pipettes - pipettes are fractions of a Indices Trading Pip.

Indices Trading Lots

In stock indices trading -indices is traded in units known as indices lots or indices trading contracts.

Trading Leverage

Because not many stock traders can afford to trade large units of indices trading contracts, there is trading leverage in indices trading which means that stock traders can borrow money and use the borrowed money to make trades with. For example leverage of 100:1 means that a trader with capital of $10,000 can borrow upto 100 times using the 100:1 leverage option & therefore after borrowing using this trading leverage the trader will have a total of $10,000 multiplied by 100, which means the trader will have a total of $1,000,000. This leverage is what makes Indices accessible to retail traders because retail stock traders can begin with little capital of their own & use trading leverage to borrow the rest of the money required for trading. The money that the trader deposits is referred to as the trader’s margin & a trader can continue borrowing money using this leverage option as long as they have the required indices trading margin in their trading account. This is why traders must have the required trading account balance in their account to open the trades they want to.