S&P/ASX 200 Stock Index
ASX 200 index keeps track of top companies in the Australian Stock Exchange Market. The total number of stocks used to calculate this index is the 200 top Australian companies represented in the ASX 200. This index is calculated based on capitalization of included companies and it's reviewed quarterly.
Even though this stock index is calculated based on capitalization, it does not track capitalization; it tracks the change in the stock prices of the various component stocks in this index.
The ASX 200 Stock Index Trade Chart
The ASX 200 Stock Index trade chart is displayed and illustrated above. On the example above this financial instrument is named as AUS200CASH. As a trader you want to find a broker that provides this ASX 200 Stock Index trade chart so that you can start to trade it. The stock index example above is of ASX 200 Stock Index on the MT4 Forex & Stock Indices Trading Software.
Other Trading Information about the ASX 200 Stock Index
Official Symbol - AS51:IND
The 200 components stocks that makes up ASX 200 Stock Index are picked from the top Australian companies measured by capitalization. This index has a base up on which the calculated total market capitalization is adjusted relative to this base - the calculation also has a divisor that means that this stock index will only reflect a change in movement only when the share prices move up & not when the market capitalization does, therefore, this stock index show the difference in the share prices rather than the total market capitalization. This is because the base represents the starts value of all share prices and when this index is calculated it tracks the total change in the share prices.
Strategy for Trading the ASX 200 Stock Index
ASX 200 Stock Index will generally move up because share prices always move up over time. This index generally moves up over longterm 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, stock 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 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 - AUD 70
Value per 1 Pips - AUD 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.
