Index Trading, also known as Binary Option Trading, is a type of trading of a group of stocks which make up the index.[1][2] Indices is the plural for an index. An Index is a measurement of the value of a section of the stock market. It is computed from the prices of selected stocks. It may also be referred as a group of stock market publicly listed uppermost businesses within a region.[3] There are numerous Stock Market Indices within the world such as S&P/ASX 200 (Australia), FTSE100 (London), CAC 40 (France), AEX index (Amsterdam), DAX (Germany), IBEX 35 and more.[4][5]
Definition edit
Indices represent the top stocks from a particular stock exchange. For example, the FTSE 100 represents the top hundred companies traded on the London Stock Exchange. Indices helps in analyzing the performance of a country’s stock market. If the stock prices of the companies making up the index rise, the index will rise with them. Similarly, if they drop, the index will drop too. Indices cannot be traded directly, as they are representations. Instead, investors trade indices through derivatives such as CFD (Contract for difference).[6] Stock indices are the most popular form of CFD trading. Unlike stocks, the investors never actually own an index. They can only ever take a position on a specific index. Taking a position on a Stock market index is a form of Index Trading or also known as Binary Option Trading.[7][8]
Trading comparison edit
Customarily, the investor buy the assets they put resources into and the estimation of the benefit and loss is resolved upon the changing estimation of the bought resources. For example, an investor invests $1000 for the period of 3 months and at the end of the specified time gains 10% of the original investment i.e. $100 (total return on the investment).[9] Comparatively, Index Trading allows the investor to profit from any kind of stock market movement no matter if the market rises or falls in value over any given time period. This kind of trading enables the investor to trade and profit in all sorts of market conditions. The return on investment per trade is much higher and achieved much faster, usually over the period of few hours, when compared to traditional Stock Market trading methods.[10]
Technical factors affecting Indices edit
- Consumer Sentiments - Consumer Sentiment is typically calculated by an index based on a survey of how consumers feel about the state of the economy. The more idealistic consumers are feeling, the more they will spend and this in turn will boost the bottom line of the corporate sector.[11]
- Credit rating- A stock rating upgrade by a credit rating agency will usually see the value of that index going up.[12]
- Liquidity - Liquidity refers to how much investor interest and attention a specific stock has.[13]
- Crude Oil Prices- Prices of crude oil has large impact on various sector of economy.
See also edit
References edit
- ^ Definition of 'Binary Options' Retrieved on 16 October 2016
- ^ An Index is a public listed indicator of the top most successful businesses Retrieved on 16 October 2016
- ^ An Index option is a type of option where the underlying is an Index i.e. a basket of various selected stocks Retrieved on 16 October 2016
- ^ Indices of the world Retrieved 0n 16 October 2016
- ^ Index options are financial contracts whose value is derived from a stock market index. Retrieved on 16 October 2016
- ^ A stock index represents the top shares from a particular exchange. Retrieved on 16 October 2016
- ^ Stock Market Indices explained by Markets And You Retrieved on 16 October 2016
- ^ Binary Option Real World Example Retrieved on 16 October 2016
- ^ Stock Index Trading VS Stock Trading Retrieved on 16 October 2016
- ^ Binary Index Trading - Informational Articles Retrieved on 16 October 2016
- ^ Trade Indices with Binary Options Retrieved 16 October 2016
- ^ Forces That Move Stock Prices Retrieved on 16 October 2016
- ^ Eight Factors That Influence Daily Trading Retrieved on 16 October 2016