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Indices Trading
FMS Markets
INDEX TRADING
Stock market indices give the measure of a specific stock market.Investors can find out the expected returns over time by comparing the current and historic index levels. Every stock exchange in the world has a benchmark stock index, while some have several.
It is impossible to track all the companies listed on a stock exchange, which is why traders resort to index trading. Through trading indices, they are able to measure the overall performance of the stock market of the country and the economy in general.
FMS Markets
What Is Index Trading
Stock market indices give the measure of a specific stock market.Investors can find out the expected returns over time by comparing the current and historic index levels. Every stock exchange in the world has a benchmark stock index, while some have several.
It is impossible to track all the companies listed on a stock exchange, which is why traders resort to index trading. Through trading indices, they are able to measure the overall performance of the stock market of the country and the economy in general.
Example of
Indices CFD Trading
Suppose you want to trade CFDs, where the underlying asset is the US30, known as ‘’Dow Jones Industrial Average Index ” Let us suppose that the US30 is trading at
The Deposit You Need
Decide to buy 5 contracts of US30. Your margin rate is 1%. Need to deposit 1% of the total position value into your margin account.
The Profit You Earn
If the price moves to 22100.00/22112.00, you have a winning trade. Close your position by selling at the current (bid) price of US30.
FMS MARKETS
THE MOVING PRICE
This continuous evaluation of price movements and resultant profit/loss happens daily. Accordingly, it leads to a net return on your initial margin. In the loss scenario where your Free equity, (account balance + Profit/Loss) falls below the margin requirements (1105), the broker will issue a margin call.
| If the price of USD30 | To | You could Gain or Lose for a Long Position | Resulting in a Return of the Initial Margina |
|---|---|---|---|
| Rises by + 1% | 22300.80/22312.80 | USD 1044 | 299.33% |
| Declines by -1% | 21859.20/21871.20 | USD -1164 | 199.22% |
