Trading indices with Octa

Trading index derivatives with us

As one of the fastest-growing financial products on the market, index derivatives present a unique opportunity to earn from stock market fluctuations while also providing high leverage and flexible trading schedule. If you are already familiar with Forex trading, you may find indices to be an exciting market to explore.

While based upon similar principles, index trading differs from currency trading in some aspects. Below you will find all the information you need to start trading indices.

You can log in or open an account if you're ready to start. Otherwise, continue reading.

What are index derivatives?

An index is a statistical evaluation of how the price of a particular set of stocks has changed over time. It enables the assessment of a particular market's overall performance. Depending on the selection criteria, indices may be classified as national, global, industry-specific, or exchange-based. Moreover, various calculation methods subdivide them into price-weighted stock indices, value (or market cap) weighted indices, and equally-weighted stock indices.

• A price-weighted index is calculated by adding each stock's price and dividing it by the total number of stocks with more weight given to those with a higher price. The higher the price of a particular stock, the more it will affect the index. One of the most popular price-weighted indices is Dow Jones Industrial Average.
• In value-weighted indices, individual shares are weighted depending on market capitalisation. The larger the market value of a company's outstanding shares, the more influence its index has. NASDAQ and SPX500 are examples of widely used value-weighted indices.
• All stocks on an equal-weighted index have the same impact regardless of market capitalisation. There are equally weighted versions for several popular indices, such as the SPX500.

An index is a statistical value you cannot trade directly, so index trading does not involve placing orders for the underlying asset. However, you can profit from index fluctuations by buying and selling derivative securities as their price reflects the movements of the asset. Using micro lots and high leverage, any trader can earn from price fluctuations with a small deposit and low risk involved. Strategies vary depending on the instruments involved. 

How to trade indices

Major stock market indices, such as FTSE 100, Dow Jones, SPX, and Germany's DAX index tend to respond well to technical analysis and are generally preferred by short-term traders. Other popular indices include France's CAC-40 and Japan's Nikkei 225.

Understanding whether an index responds well to technical analysis mainly depends on the country the index originates from and the economic sectors it represents. Below you will find a brief description of the major indices we offer for trading.

The Dow Jones Industrial Index

Symbol: US30

Trading hours: Monday to Friday, 1:00 a.m. to 11:15 p.m., 11:30 p.m to 12:00 a.m.

Thanks to the U.S. market’s volatility, the Dow Jones Industrial Index is one of the most popular instruments among traders. Composed of 30 major U.S. companies, Dow Jones provides a cross-section of the U.S. economy and, consequently, is affected by regional news releases. 

The Standard and Poor's 500 Index

Symbol: SPX500

Trading hours: Monday to Friday, 1:00 a.m. to 11:15 p.m., 11:30 p.m to 12:00 a.m.

Another popular U.S. index is the Standard & Poor's 500, which reflects the shared values of the 500 largest companies in the United States. As it covers 70% of the stock market, SPX500 can be considered a better benchmark of the U.S. economy than Dow Jones.

The Nasdaq 100 Index

Symbol: NAS100

Trading hours: Monday to Friday, 1:00 a.m. to 11:15 p.m., 11:30 p.m to 12:00 a.m.

The NASDAQ 100 Index includes the 100 largest companies listed on the NASDAQ exchange and reflects several industries, including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology. With these sectors' combined influence on the economy, you can expect the index to be significantly affected by the U.S. financial news.

The ASX 200 Index

Symbol: AUS200

Trading hours: Monday to Friday, 2:50 a.m. to 9:30 a.m., 10:10 a.m. to 12:00 a.m.

Based on the Sydney Futures Exchange (SFE) Share Price Index Futures contract, the Aussie 200 Index measures the movement of various sectors of the Australian Stock market. The index responds to economic news and reports from Australia. It is also affected by changes in commodity prices as the Australian economy depends on them.

Nikkei 225 Index

Symbol: JPN225

Trading hours: Monday to Friday, 2:00 a.m. to 11:00 p.m.

Often referred to as the Japanese Dow Jones equivalent, the Nikkei 225 is a stock index for the Tokyo Stock Exchange that includes Japan's top 225 companies, including Canon Inc., Sony Corporation, and Toyota Motor Corporation. As the Japanese economy is highly export-oriented, the index may be affected by some economic news from the U.S.

EURO STOXX 50 Index

Symbol: EUSTX50

Trading hours: Monday to Friday, 9:00 a.m. to 11:00 p.m.

The EURO STOXX 50, designed by Stoxx Ltd, is a capitalisation-weighted index made of the largest companies across several industries, including Siemens, SAP, Sanofi, Bayer, BASF, and others. The index covers 50 companies from 11 European countries, including Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

DAX 40

Symbol: GER40

Trading hours: Monday to Friday, 9:00 a.m. to 11:00 p.m.

Another popular capitalisation-weighted index, the German DAX, includes the top 40 companies trading on the Frankfurt Stock Exchange, including BASF, SAP, Bayer, Allianz, and others. It is commonly believed to be a good market with substantial volumes, as it tends to have clear trends for several hours at a time with relatively small pullbacks. Like all major stock indices, DAX 40 usually responds well to technical analysis and is affected by economic news from Germany and the E.U.

IBEX 35

Symbol: ESP35

Trading hours: Monday to Friday, 10:00 a.m. to 6:30 p.m. 

The IBEX 35, which maps the 35 most liquid Spanish stocks, is the benchmark stock market index of the Bolsa de Madrid. As a capitalisation-weighted index, it is based on the free float method, which means it counts the shares in public investors' hands instead of the restricted stocks held by company insiders. Some of the largest companies it consists of are BBVA, Banco Santander, Telefónica, and Iberdrola. However, it is essential to note that the list is reviewed and updated twice a year. 

CAC 40

Symbol: FRA40

Trading hours: Monday to Friday, 9:00 a.m. to 11:00 p.m. 

As another European free-float capitalisation-weighted index, the CAC 40 is France’s stock market benchmark. It represents the top 40 stocks traded on the Euronext Paris stock market. As France represents about a fifth of the eurozone economy, it might provide an insight into where the European market is heading and present an opportunity to profit from its price fluctuations. The CAC 40 covers stocks across multiple industries, including pharmacology, banking, and oil equipment.

FTSE 100 

Symbol: UK100

Trading hours: Monday to Friday, 9:00 a.m. to 11:00 p.m. 

Also called the footsie, the Financial Times Stock Exchange 100 is a market capitalisation-weighted index representing the top 100 blue-chip companies on the London Stock Exchange. The index maps more than 80% of the total capitalisation in the United Kingdom. Stocks are free-float weighted to ensure that only the investable opportunity set is included within the index. The FTSE group manages the index, which is a joint venture between the Financial Times and the London Stock Exchange.

How to start trading?

The first step is to learn how to open an OctaFX MT4 or MT5 trading account. The MT4 and MT5 trading platforms offer up to 230 instruments, including the above indices, crude oil, and more. We don’t charge swaps or commissions and offer industry-leading spreads.