<iframe src="//www.googletagmanager.com/ns.html?l=en-GB&wl=ETX&id=GTM-K79WJF" height="0" width="0" style="display:none;visibility:hidden"></iframe>

How to Trade on Indices?

Read more about indices trading, how to trade on an index and discover a range of tips and strategies.

Whilst stocks give an indication of the financial climate for individual companies, indices allow traders to step back and look at the bigger picture of what’s going on in the financial markets. However, the nature of an index means that traders need to take multiple stocks into account rather than a single company, meaning that there are likely to be a larger number of aspects which are worthy of consideration.

Indices: The Trading Process

Indices: The Trading Process

When it comes to trading, Indices work in a similar way to many other Spread Bet and CFD products. Like the individual stocks, which they are comprised of, traders can take positions dependent on whether they think that the value of the index will go up or down. Again, as with individual stocks the aim is to either ‘sell’ at a higher price than one ‘bought’ at or alternatively to ‘buy back’ at a lower price if one originally ‘sold’. All the stocks listed on the index will be included in the ongoing calculations to determine the current level of the index, with the index rising or falling in value depending on the current strength or weakness of its component stocks.

Index Volatility

Index Volatility

Because indices are made up of a number of different stocks, the volatility of an index can be quite high, due to constantly moving share prices. However, for the same reason it is rare for indices to move by more than a couple of percentage points on a daily basis, since it’s unusual that all stocks on an index would experience sharp movements in the same direction at the same time. There are occasions, however, when this does happen; examples include the stock market crashes in the 20th and 21st centuries.

Indices Trading: An Example

Indices Trading: An Example

In the following scenario, trader x decides to take a position on the FTSE100. Let’s say that the FTSE is currently trading at a level of 6949:6950, meaning that the spread is currently one point. The trader decides to ‘buy’ £10 worth of the FTSE at the 6950 level. Since the ‘sell’ level is 6949, the trader starts off £10 down, because if the trader were to close this position immediately that’s the loss they would make.

Let’s say that the index subsequently moves up to a level of 6955:6956. If the trader were to sell his £10 worth of FTSE at this point, the profit on the trade would be £50; the first point of movement in the trader’s favour would turn their -£10 position into a £0 position (where they would be making neither a profit or a loss and would break even if they exited at this point), with the following five points of movement then being pure profit.

However, let’s say that instead of the FTSE’s value rising, it instead falls to a level of 6945:6946. In this case, the trader would lose £50 if they sold at this point, because the price at which that £10 worth of FTSE is being sold is five points lower than the price at which it was purchased at.


or LOGIN as existing customer




What Indices
can I Trade?


Indices Trading
Tips and Strategies

Indices Trading?

Indices Trading Overview

Trade on global indices from Wall Street to the FTSE 100 with ETX Capital. Boasting instant execution...


New to Indices Trading?

Trading on indices remains one of the most popular ways to trade equity markets. Offering exposure to a...


What are Indices?

Indices, or indexes as they are also known, are assets which are grouped together; either representing...


What Indices can I Trade?

ETX Capital offers trading on a wide choice of indices on the TraderPro platform...


How to trade on Indices?

Whilst stocks give an indication of the financial climate for individual companies, indices allow traders...


Indices Tips and Strategies

There is no specific size for an Index; examples range from Germany’s DAX 30 all the way up to...


One Broadgate Circle, London, EC2M 2QS

New Accounts: +44 20 7392 1400

Existing Customers: +44 20 7392 1434

Monday to Friday: 7:30am - 9:00pm

ETX Capital Payment Types.
English United Kingdom (Change)

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.6% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets orCFDs work and whether you can afford to take the high risk of losing your money.

Apple, iPad, iPhone and iPod touch, are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Google, the Google logo, Google Play logo and the Google interface are trademarks or registered trademarks of Google, Inc.

Monecor (London) Ltd is a member firm of the London Stock Exchange. Authorised and regulated by the Financial Conduct Authority with Financial Services register number 124721.

The information on this site is not directed at residents of the United States, Belgium, Canada, Singapore, or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

In the unlikely event of ETX becoming insolvent, segregated client funds cannot be used for reimbursement to ETX Capital’s creditors. If we are unable to satisfy repayment claims, eligible claimants have the right to compensation by the Financial Services Compensation Scheme (FSCS), up to £50,000. If one of the banks ETX Capital uses to hold client money goes into liquidation then the losses would be shared by clients in proportion to the share of the money held with the failed bank. Funds lost this way may be compensated under the FSCS up to a limit of £85,000 per person.

79.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.