Market 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 and concepts that are required to make it easy to understand what is stock indices trading & how to carry out stock indices trading.
What is Stock Indices Trading?
Now with the advancement in technology and the growth of the internet stock 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 starting amount required to begin trading is $100 dollars making indices trading affordable to many retail traders & investors.
The retail investor can now get access to the online market through these retail stock trading brokers. All a trader requires is to open an account with a broker & the trader then can trade with their broker from anywhere in the world.
The retail indices brokers also provide traders with the capital required to trade in the market using leverage. Stock Indices trading is traded in standard lots or one standard indices trading contract. Because many traders can't afford this, brokers provide capital to traders and traders can borrow this capital from their online brokers and trade with it using leverage. For example a online broker will provide leverage of 100:1 meaning that a retail trader can borrow up to 100 times of the capital they have. Therefore, if a trader has capital of $1,000 dollars in their trading account using leverage 100:1, they can borrow up to 100 times their capital, this will be $1,000 dollars multiplied by 100, which is equal to $100,000 which the trader will now control and the trader can transact with this amount in the market. This means that a trader with only $1,000 dollars can now trade with $100,000 leveraged amount in Indices after using leverage of 100:1 from their 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 trading 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 up or down and it is this movement that traders want to trade in order to try and make a profit from these price moves. The daily price fluctuation is very small and mostly these moves are less than 1 % in value. This is why brokers provide trading leverage & why most traders use leverage so that they can multiply the profits from these market moves. Stock Indices 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:
- How to Develop a Stock Indices Strategy
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- SWI 20 Indices Strategy How to Develop Indices Strategy for SWI20 Guide
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