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