S & P 500 - Standard & Poor's 500 Index
Standard & Poor's 500 is a index that tracks capitalization of 500 stocks that represent major industries in American economy. The list of 500 companies is made up of stocks shown in NYSE & NASDAQ.
The S&P 500 just like the Dow Jones Industrial Average Stock Index is more volatile than most of the other Top Indices, The S&P 500 index will over the long-term trend upward but it'll have more price pullbacks & more consolidations than other stock index. Traders may prefer to trade other stock index other than this one if they are more accustomed to trading the more stellar trends found in other top indices.
One of the reason this stock index has more oscillations than other stock index is because it has more constituent stocks than other stock index. This index also has a weighting factor in its calculation which also contributes to making it more volatile.
The S & P 500 Trade Chart
The S&P 500 trade chart is displayed & illustrated and shown above. On the example above this instrument is named as US500CASH. As a trader you want to find a broker that provides S&P 500 trade chart so that you can begin to trade it. The example above is of S&P 500 on MT4 Forex & Indices Trading Platform.
Other Information about S & P 500 Index
Official Symbol - SPX:IND
The 500 components stocks that make up the S&P 500 are chosen from the major industries in American economy. The calculation of this index is however different compared to other Indices; the price component of the 500 stocks also has a weighting factor that makes this stock index more volatile than others.
Strategy for Trading S & P 500 Index
S&P 500 method of calculating makes it more volatile & therefore there are more wide swings in price movement of this index. Although this index in general moves upward over the long-term because American economy also shows strong growth and is also the largest economy in the world.
As a trader wanting to trade this stock index, be prepared for wider price swing and a little more volatility.
As a trader you want to be biased & keep buying as the index moves upward. When America economy is doing well (most times it is doing well) this upwards trend is more likely to be ruling. A good stock index trade strategy would be to buy dips.
During Economic Slow-Down & Recession
During economic slow-down & recession times, companies begin to report lower profits & lower business growth prospects. It is because to this reason that investors begin to sell stocks of companies reporting lower profits & therefore index tracking these particular stocks will also start to move downward.
Therefore, during these times index trends are likely to be moving downwards & as a trader you should also adjust your trading strategy accordingly to fit the prevailing downward trends of the stock market index that you're trading.
Contracts & Specifications
Margin Requirement Per 1 Lot - $ 12
Value per 1 Pips - $ 0.1
NB: Even though general trend is generally upward, as a trader you've to factor in daily market volatility, on some days the index might oscillate or even retrace, index market retracement may also be significant at times & therefore as a trader you need to time your entry precisely using this trade strategy: Indices trade strategy & at the same time use proper money management rules just in case of more unexpected volatility in the market trend. About money management rules in index topics: What is index money management and index money management methods.
