Trade Stock Indices

Learn Online Trading Courses for New Beginner Traders

Index provides an alternative investment to traders and trading investors. Retail traders or the individual indices investors trade the market for speculation purpose to profit from the price movements. Traders will place stock trades in the market and try to make profits from the market moves.

Indices activities involve speculative indices transactions which make the market the one of the liquid one trading market in the world.

The market is also an Over The Counter market which means stock trades can be opened from anywhere in the world.

Most indices activity is done for speculation and when most people talk about indices trade they are most likely referring to speculative indices trading. The market participants that trade for speculation purposes are the small individual indices investors & retail traders and they are commonly referred to as retail trading investors or retail stock traders.

The market growth that is as a result of these retail traders joining the market and the market online through trading online brokers.

The retail traders often trade online and open stock trades from their stock trading accounts that they have opened with their stock brokers. This makes the trading a global online market place where stock traders can open stock trades in this online market from anywhere in the world. The size of the online price means the market is very liquid & stock traders can open stock trades at any time of day or night during the trading week. This liquidity also means that no one can control the market because of its sheer size.

Trading prices keep moving up and down all the time and these market movements are determined by supply and demand of indices.

These market movements can be studied using trading analysis & indices fundamental analysis.

Stock technical analysis is the study of market movements based on different stock trading price pattern formations that can be interpreted differently depending on the pattern formed. This study of price movement & stock price patterns is known as trading price action trading. Other stock analysis methods include use of charts to interpret stock market moves. Stock technical analysis also includes use of indicators which are tools that calculate the momentum of a stock trend.

Stock trading analysis also involves study of market trends. A indices trend is the general direction of prices in the market that can be up or down. In the market, indices prices generally move in trends and when a trend is formed prices keep moving in that particular direction for a time period. For this reason when a trend is formed then traders will keep opening stock trades in the same direction of the trend for as long as the trend continues to move in that particular direction. Traders will use technical analysis to identify the direction of these trends and also to identify the energy of these trends.

Fundamental trading analysis is the study of price movements by interpreting economic reports to identify the likely direction that stock price is likely to move. This type of analysis will require the trader to read a lot about all the various economic reports and learn how to interpret each indices report. This type of analysis may take time to learn and master. It also requires that the traders keep up with the numerous and many economic data reports released.

Brokers

Because the online market doesn't trade from one central indices trading place, indices traders need to trade with a broker that will connect them to the online trading market.

To start trading - traders need a PC computer that is connected to the internet. Traders then open a account with an online broker and from this account traders can place stock trades directly to the online stock market. Once one opens a trade on their stock account, the online broker will then place these trade positions on the market on behalf of the traders. Once the trader decides to close out their trades, then the broker will close the stock trades and remove the stock trades from the online market and credit traders with the profit or loss they have made from trading the market.

With the coming of many brokers - traders can open trading accounts from anywhere in the world and trade indices from any location in the world directly from their home computer or office computer. The ease with which one can open a account with any broker and trade from anywhere in the world is what has contributed to the growth of the market especially among the retail investors & retail stock traders.

Trading Softwares

The broker provides traders with platform which are commonly referred to as trading softwares in the market. From these platforms stock traders can log in to their stock trading accounts, place stock trades from this platforms & also monitor their trading account balance from these platforms.

The softwares provide traders with streaming price quotes and charts that draw these stock quotes in the form of graphs known as charts.

A indices platform will for example display indices instruments charts and also display streaming price quotes of these instruments.

If the streaming price quotes are moving up, then the chart of these trading price quotes will show a general upwards direction and traders can buy indices based on the upward stock price trend movement of these trading price quotes. This is why charts are provided and drawn automatically on the platform so that stock traders can determine the direction of the market price and therefore be able to decide what direction to place their trades.

How to Open a Trade

Once one opens a buy/sell trade position, the trader has to hold onto the trade for some time so as to give the market price, time to move in one or the other direction. This trade is known as a position. A trader may only open their trade for a couple of minutes and only aim to make little profits or a indices trader may hold their trade for hours so as to try & make more profits from the trade transaction. However, because indices trading is speculative, stock trades may also move in the opposite direction of the trend and a stock index trader should be ready to close their stock trade positions after the loss moves against their position by a specified number of pips so as to minimize further losses.

Why Trade Indices

The number one of why to trade Indices is leverage. With leverage - traders can open their account with little capital & borrow the rest from the broker the money required to make indices trade positions. For example a trader can open an account with $10,000 & the broker might give them leverage of 100:1 which means stock indices traders can borrow up to 100 times their capital, therefore a trader will control $10,000 multiplied by 100 which is a total capital of $1,000,000 that a trader can open stock trades with.

However, traders should be careful when trading with trading leverage because leverage increases profits & also losses and that's why stock traders should make sure they learn money management rules before they start Indices. Indices money management rules tutorial is covered in this learn web site on the learn lessons section under the Key Concepts topics.

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