Stock indices are formed by a statistical aggregation for a given number of share prices. i.e. the FTSE 100 is a measure of performance (share price) of the top 100 companies listed on the London Stock Exchange (LSE).
If you choose to spread bet on stock indices then you will have a choice of the following:
UK: FTSE 100, FTSE 250,
US: Tech 100, SPX 500, Wall Street, S&P 500
EUROPE: German DAX, CAC 40, BEL 20 and more
EASTERN: Japan 225, Hong Kong HS42, Singapore Blue Chip, India 50, China H-Shares and more
OTHER: Canada S&P/TSX 60, Australia S&P/ASX 200
There are a huge number of other stock indices ranging from Jamaica to South Korea; the availability of these markets on spread betting platforms varies however the ones above are almost always available.
Why Spread Bet on Indices?
Stock indices are one of the most popular forms of financial spread betting. The spread sizes for stocks are often the smallest available and can range from 0.5 points to 2 points. These tight spreads attract more traders, as their risk is lower.
Stock indices are also a great measure of the performance of an entire country. If a country is performing well on the global economic platform, it will almost always be reflected by the share price of its top companies.
This overall performance measure makes stock index betting more attractive as global economic news is often easier to monitor and understand than individual share price movements.
Stock Index Example
On the morning of October 25th 2012, the price of the FTSE 100 stands at 5945:5946.
You decide to buy the FTSE at 5946 for £10 per point.
You hold your bet open for 2 hours and your prediction pays off as the FTSE 100 rises to 5957:5958 – you decide to close the trade and take the ‘sell’ price of 5957 for a difference of 11 points and a gain of £110.
The FTSE 100 and other indices will be quoted at two decimal places, the above example has been simplified.
Remember that you can lose your money just as fast as you can win; always take precautions and read our guide on stop losses before betting