Trade Stock Indices

About Indices

Stock Indices Trade is a term that is commonly and often used by indices investors & stock traders to describe activity in the market that is carried out by traders, investors and speculators.

In trading a indices trader can buy/sell indices. A trader will buy indices if they think the value of the instrument is likely to appreciate in the future. A Trader will sell indices if they think the value of the instrument is likely to depreciate in the future.

The Trading Market is an over the counter market which means trading is carried out through a network of the big international banks; this trading network is commonly referred to as the interbank network. This interbank indices trading network consists of banks and brokers which are in different locations. These interbank network is responsible for providing the prices at any particular time to the traders and other market participants that want to buy or sell indices. In trading the price is constantly changing and this trading price is denoted by what is known as a Trading Quote. In Trading the Price is displayed and illustrated as a Quote. This indices quote is constantly changing and the interbank network will update automatically the current quote & stock traders can then trade the at the current price.

Indices Trade Quotes

Trading prices of instruments is displayed using Stock Index Trade Quotes. This is the price at which any trader wanting to trade indices will trade at.

Because trading prices are constantly changing it means that stock traders can take advantage of these trading price movements to make profits by trading these trading price movements. The price of any indices instrument will keep moving because of demand supply. This is because there are many participants trading indices instrument in the open market and therefore this means that the price quotes will get determined by the current market forces. These market forces may be determined by factors like an increase in demand for indices.

Indices Trade Pips

In trading the price movements are measured in points commonly referred to as Pips in the market. The pip is used to calculate the profit/loss that a Trader makes in a particular trade. For example if a stock index trader makes a trade position which moves 50 pips in his direction, then the profit of the trader will be calculated as 50 indices pips. Pip in indices trading is represented as the second last decimal point in the Trading Quote & it is made up of pipettes - pipettes are fractions of a Trading Pip.

Indices Trade Lots

In trading -indices is traded in units known as lots or indices trading contracts.

Leverage

Because not many stock traders can afford to trade large units of trading contracts, there's leverage in indices trading which means that stock traders can borrow money and use the borrowed money to make trades with. For example leverage of 100:1 means that a trader with capital of $10,000 can borrow upto 100 times using the 100:1 leverage ratio & therefore after borrowing using this leverage the investor will now control a total of $10,000 multiplied by 100, which means that the trader will have total of $1,000,000 dollars. This leverage is what makes accessible to retail traders because retail stock traders can begin with little capital of their own & use leverage to borrow the rest of equity required for trading. The money that the trader deposits is referred to as the trader's margin & one can continue borrowing money using this leverage as long as they have the required margin in their trading account. This is why the traders must have the required trading account balance in their account to open the transactions they want to.

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