Trade CFDs on the world's major stock indices – with low margins and more 24-hour markets than any other provider. Trade the Australia 200 out-of-hours on a 4-point spread and the Germany 30 on a 5-point spread.
On 25 indices, including Wall St and FTSE 100
Opportunities across major and niche indices
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From 1 point on FTSE 100 and Australia 200
As well as expert analysis to help with your strategy
Execute larger trades using IG's outstanding trading technology
A stock index is a hugely important part of our financial world, but it is nothing more than a number representing the top shares from a particular exchange.
For example, the FTSE 100 represents the largest 100 companies traded on the London Stock Exchange. If, on average, the share price of these companies goes up - then the FTSE 100 will rise with them. And if they fall, it will drop.
Other examples of stock indices include:
Most of these are calculated using a capitalisation-weighted average, which means the size of each company is taken into account. The more a particular company is worth, the more its share price will affect the index as a whole.
However, the Dow Jones and Nikkei are price-weighted indices, where shares with higher prices have more influence. This means a stock trading at $100 is given 10 times more weight than one at $10.
Example: Buying Australia 200
ASX 200 JUN15 Future
Australia 200 Cash
Buy at 5501.5
1 standard contract
Equals A$25 per point
Margin = Number of contracts x value of one contract x index level (mid price) x margin rate (0.5%)
1 x A$25 x 5,501 x 0.5% = A$687.63
|What happens next?||
The market rallies dramatically, moving up 149 points by 4.50pm, when funding is calculated. It drops back a little overnight, down 10 points from 4.50pm the previous day.
Funding = (One-month bank bill swap rate + 2.5%) x (size of position) / 360
(1.9% + 2.5%) x (5,650 x A$25) / 360 = $17.26
5639.5 / 5640.5
Sell at 5639.5
|Overall market movement & profit/loss||
5639.5 – 5501.5 = 138
Each contract is worth A$25 per point (so A$25 x 138 points)
Gross profit = A$3,450
1-point IG spread (included above)
Funding cost: A$17.97
A$3,432.74 net profit subject to tax
If the market dropped 139 points instead (with a spread of 1 point):
(-139 - 1) x (A$25) - A$17.26
Net loss = A$3,517.26