Market Lesson Guide

Learning to trade the market will be much easier for beginner traders that starts by learning trading basics as they will have the basic ideas & concepts that are required to make it easy to understand what is stock indices trading & how to carry out indices trading.

What is Stock Index Trade?

Now with the advancement in technology and the expansion of the internet indices trading & the coming up of retail brokers indices trading has now become accessible to retail traders and anyone with a computer that is connected to the internet can start trading indices. The minimum beginning amount required to start trading is $100 dollars making indices affordable to many retail traders & investors.

The retail trader can now get access to the online market through these retail stock trading brokers. All a trader requires is to register an account with a broker & the trader then can trade with their broker from anywhere in the globe.

The retail indices brokers also provide online traders with the trading capital which is required to trade in the online market using leverage. Stock Index trading is traded in standard lots or one standard indices trading contract. Because many traders can't afford this amount, brokers provide the capital to traders and the online traders can borrow this trading capital from their online brokers and trade with it using leverage. For example a broker will provide leverage of 100:1 ratio meaning that the retail trader can borrow upto 100 times of the capital they have. Therefore, if a trader has capital of $1,000 in their account using leverage 100:1, they can borrow up to 100 times their capital, this will be $1,000 multiplied by 100, which is equal to $100,000 which the online trader will now control and the Stock Index trader can transact with this amount in the market. This means that a trader with only $1,000 can now trade with $100,000 dollars leveraged amount in Indices after using leverage of 100:1 from their online broker.

Trading Leverage which means that a trader has access to borrowed capital and can trade with this borrowed capital provided by their broker is what makes indices accessible to may retail stock traders. This leverage is what has contributed to the growth and popularity of indices trading. In trading 95% of all transactions is carried out by retail stock traders.

Trading Market Moves

In trading, stock prices are always moving upward or downward and it's this movement that traders want to trade in order to try and make a profit from these price moves. The daily price oscillation is very small and mostly these moves & heads are less than 1 % in value. This is why brokers provide leverage & why most traders use leverage so that they can multiply the profits from these market moves. Stock Index is traded in big lots of many units so as to increase the profits per transaction - However, this can also increase losses as well if the trades go against a stock index trader's position.

More Tutorials and Topics:

Trade Stock Indices

Market Lesson Guide

What is Stock Index Trade?

Trading Market Moves