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Find out the purpose of major and minor stock indices and how they are compiled. Learn how to gain exposure to these volatile markets through some of the most popular trading products in the world.
|Indices explained||Pricing and weighting||Futures||Ways to trade|
|What is a stock index?Indices to watchTypes of indicesHow can I trade a stock index?||How are indices priced?How do dividends affect index prices?||Trading index futuresWhy trade stock index futures?Limitations||CFDsOptionsDigital 100sFutures|
By trading index Contracts for Difference (CFDs) with IG, you can gain exposure to whole markets and sectors at a fraction of the cost and without the complexity of buying into the representative shares.
Trading stock indices is our most popular form of CFD trading. You buy contracts which stipulate that you’ll exchange the difference in value of a particular index between the time you open your position and the time you close it. This means that you can trade no matter which direction you think the index is going to move.
To find out more, please visit our CFD trading section.
CFDs are a leveraged product and can result in losses that exceed your initial deposit.
Options are contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a fixed price on or before a certain date. You can use them to speculate on the performance of an index, or perhaps to hedge existing investments such as a share portfolio.
You can normally trade short- or long-term options on leading stock indices, without having to pay commission.
Digital 100s are a form of option. They pose a question and you pick whether the outcome will be yes or no.
A digital 100 may ask you, for example, if a particular index will be above a certain level at a certain time. This allows you to speculate on the performance of that index with a specific expiry time, achieving either a pre-determined profit or nothing at all.
Futures contracts enable two parties to exchange the difference in value of a stock index – or other asset – at a specified future date for a price agreed today.
All of the major stock indices have corresponding futures contracts that are traded on a special futures exchange. Investors often use index futures to protect their portfolios from the risk of the broader market falling. Alternatively you can use index futures to increase your exposure to movements in a particular index, adding leverage to your portfolio.