How Do You Set Up For Indices Trading?

Stock indices are the newly introduced leveraged products for online trading. Traders wanting to begin trading these indices should first of all take time so as to learn how the indices markets work. Traders should take time to learn about leverage - leverage is when a trader is given $100 dollars to trade with for every $1 dollar of their own. For example, if a trader has capital of $20,000 dollars to begin with, then after getting leverage from their brokers traders will now control $2,000,000 & they can now open transactions worth up to $2,000,000 dollars. This is what leverage is, a trader gets more money to invest with. This is what makes online stocks indices popular.

However, with leverage a trader has to learn how control this leverage by learning money management methods. Money management methods will show traders how to control leverage so that they can use this leverage to their advantage and make profits.

The best way to learn about the indices is to open a demo account, that way as a trader you will learn about index investing without depositing money. The demo account is a practice account where a trader can practice with virtual currency - everything else about the demo account is similar to the real account except for the virtual currency used in a demo account. The demo account will provide beginner traders with access to the real stock index market. A trader can practice with this demo account until they are ready to open a real account & start trading the indices market with invested capital, where profits can be withdrawn and losses deducted from their capital.

Below is a list of tutorials containing all the information that beginners require to start.

1. Introduction to Stock Indices

2. Stock Indexes Instruments

3. Market Hours

4. Strategy

5. System

6. Trading Plan

7. Market Sentiments

8. Advantages of Stock Indexes

9. One of the Best Stock Indexes Broker

The above tutorials will provide beginners with the best starting point when it comes to learning. Other lessons that can be applied to online indices are:

Start Stock Indices Trading - Stock Indices Lessons

How to Start

The first thing that a trader has to do so that as to begin is to download the stock index platform & then install this trading platform on their computer so that as to get access to the online indices market.

Once you have downloaded and installed the platform you'll then open a demo account, then you'll be ready to start.

The next thing one has to do is to learn the various stock index instruments available for online trading. These instruments are:

EURO STOXX 50
DAX 30
Dow Jones 30
FTSE 100
Nikkei 225
S&P ASX 200
FTSE MIB 40
S & P 500
NASDAQ 100
CAC 40
SMI 20
AEX 25
Hang Seng 50
IBEX 35

In the online stock index market only the most popular indices are available for online trading, these are the 14 that are listed above.

Where to Find these Stock Indices on the Trading Software

As beginner you may want to know where to find these financial instruments on your trading platform, this is displayed and illustrated below.

How Do You Set Up For Online Stock Indices Trading? - How to Trade Stock Indices Tutorial

Stock Indexes Instruments on Trading Software

A trader can find these instruments from the "Market-Watch" window that's displayed and illustrated above. To find the market-watch pop up window on the platform above a trader can follow these steps: click 'View' next to 'File' at the top left corner, from the drop down menu choose "Market-Watch", above Market-Watch window pop up will appear displaying a list of these stock index. Alternatively use the keyboard shortcut keys - CTRL+M.

If some of these instruments are not shown on the platform a trader can follow the steps below so that to have these instruments displayed on the above market-watch window.

Right click within the Market-Watch window & then select 'Show All' as is illustrated below:

How to Set Up For Online Stock Indices Trading - How to Trade Stock Indices Tutorial

Display all Stock Indices on Trading Software

You can then select to open charts by choosing a particular index & open its chart.

After opening all the instruments that you want you might also want to then click 'Hide All' as shown above so as to hide those instruments that you are not trading as well as save internet bandwidth by only streaming the financial instruments that you are trading.

After choosing all the 14 indices as shown above you're ready to begin practice trading these instruments on your demo account.

Stock Indexes Trading Charts

Stock Indexes are analyzed using charts, indices values are plotted on a chart graph & these charts is then traded like a financial instrument for the purpose of speculation and making profit.

As an example the US100 weekly index trade chart is displayed and illustrated above. The movement is measured in points. The above index current value is 4471.10 - A trader can buy this instrument & if the value then appreciates to 4471.50, trader will have made a profit of 40 points. A trader can also sell the instrument & if the value moves down to 4470.50, trader will have made a profit of 60 points.

For index a trader can make money both when the market is moving up or down. When a trader buys this is called going long & when a trader sells this is known as going short.

Stock Indexes Brokers

Traders gain access to the Online Stock Indices market through index brokers. These brokers are the ones that provide trading platforms, demo accounts, real accounts, trade charts and all the technical analysis tools required for trading index.

The brokers charge a small fee for every trade opened which is known as the spread. For example a broker may charge 3 points as their spread, therefore in the above example where profit is 40 points a trader would have to also factor 3 points that are charged for the trade by the broker - therefore the profit would be 37 points after factoring the broker's charges.

How Much Money to Start?

The minimum recommended capital to begin trading with is $10,000 dollars. Starting with any amount below this will mean that you will be undercapitalized. Most traders start with $10,000, $20,000 or $50,000 dollars, this way they are well capitalized and therefore they have better chances of making profits.

Those traders that begin with less capital are undercapitalized and under capitalization is one of the things that makes most traders not to succeed. Just like all other businesses, if you begin any business while undercapitalized chances of the business not succeeding are greater as when compared to when you begin a business while having enough capital - the same with online indices trading.

How to Use Practice Accounts

Practice accounts allow traders to practice trading indices without having to invest or deposit money, this way a trader can learn and decide if stock index trading is suitable for them or not. If as a trader once you have practiced and are making profits on your demo account then you can open a real account, deposit money as capital and start trading these instruments for profits.

The recommended time for demo account practice is 30 days. These 30 days as a trader you will continue to learn topics about stock indices trading so that you can continue improving your trading skills while at the same time practicing on the demo.

Technical Analysis and Strategies

The nest thing to do is to make a point of learning the various technical analysis topics used to analyze stock index movements as well as strategies used. On this website you'll find all the information about these strategies and technical analysis tutorials required to help you improve your skills so as to increase your knowledge and also your chances of making profits in this online stock index market.

Trade Stock Indices