S&P/ASX 200 Stock Index
ASX 200 stock index keeps track of top corporations in the Australian Stock Market. The total number of stocks used to calculate this stock index is the 200 top Australian corporations represented in ASX 200. This index is calculated based on capitalization of included corporations & it's reviewed quarterly.
Even though this stock index is calculated based on capitalization, it does not track capitalization; it tracks change in the stock prices of the various constituent stocks in this index.
The ASX 200 Chart
The ASX 200 trade chart is displayed and illustrated above. On example above this trading instrument is named as AUS200CASH. As a trader you want to find a broker that provides this ASX 200 trade chart so that you can begin to trade it. Example displayed above is of ASX 200 on the MetaTrader 4 Forex and Stock Index Software.
Other Trading Information about the ASX 200 Stock Index
Official Symbol - AS51:IND
The 200 components stocks which constitute ASX 200 are chosen from the top Australian corporations measured by capitalization. This stock index has a base up on which the calculated total market capitalization is adjusted relative to this base - the calculation also has a divisor which means that this stock index will only reflect a change in movement only when the stocks prices move up and not when the market capitalization does, therefore, this index show the difference in the stocks prices rather than the total market capitalization. This is because the base represents the starts size of all stocks prices & when this stock index is calculated it tracks the total change in the stocks prices.
Strategy for Trading the ASX 200 Index
ASX 200 will generally move up because stocks prices always move up over time. This stock index generally moves up over long term because the Australian economy also shows strong growth backed by their mining sector which has great reserves of Gold as well as other valuable commodities.
As a trader wanting to trade this stock index, index will move upwards faster when the Australian economic indicators show accelerated economic growth.
As a trader you want to be biased and keep buying as the stock index moves up. When the Australian economy is performing good (most times it's performing good) this upwards trend is more likely to be in-favor. A good stock indices trade strategy would be to buy the dips.
During Economic SlowDown and Recession
During economic slowdown & recession times, companies start to report lower profits & lower growth prospect. It is due to this reason that investors start to sell stocks of companies reporting lower profits & hence the index tracking these particular stocks will also begin to move downwards.
Hence, during these times indices trends are likely to be heading downwards and as a trader you should also adjust your trading strategy accordingly to suit the prevailing downward trends of the stock market stock index that you're trading.
Contracts & Specifications
Margin Required Per Lot - AUD 70
Value per Pip - AUD 0.1
NB: Even though the general trend is generally moves upward, as a trader you've got to factor in the daily market volatility, on some days the stock index may move in a range or even pull back, market retracement might also be substantial at times and hence as a trader you need to time your entry precisely when using this strategy: strategy & at same time use proper equity management guidelines just in case of more unexpected volatility in the market movement. About equity management guidelines in stock index tutorials: What is stock index money management & index equity management methods.
