Stock index

The most frequently traded indexes in the world can be found in TREX trade Platforms, including the important indexes of the United States, Japan and China

What is a stock index?

The stock index, also known as the share index or the stock market index, is a financial futures contract that uses the stock price index as the subject. The buyers and sellers trade the price level of the stock index after a certain period of time. After the contract expires, the stock index will be settled by using the cash to settle price differences. The index is named after the name of the news or financial services company and serves as a benchmark index for measuring the stock market. The most frequently traded indexes in the world are mainly those of developed countries and regions, including the United States, the United Kingdom, France, Australia, Germany, and Japan. Futures companies are the link between traders and exchanges. In addition to the exchanges’ own members, all traders must invest in futures brokerage companies to invest in stock index futures. The stock index trading of TREX trade can support 24/5 service as well as more than 10 popular products, including China 300, US Tech 100, Hong Kong 50, and Japan JPN225.

The China 300 is an asset that takes the CSI 300 Index as its subject. Its trading symbol is CHINA300. The subject CSI 300 is a component stock index compiled from a sample of 300 A shares in the Shanghai and Shenzhen stock markets. The CSI 300 Index covers about 60% of the market value of the Shanghai and Shenzhen stock markets. Therefore, it has market representativeness and fully reflects the overall performance of the Chinese stock market.

Main features

•   It has strict sample selection criteria and targets trading component indexes

•   It has more stable sample stocks and uses buffer technology to ensure regular adjustments

•   The distribution of the index industry is basically in line with the distribution of the market industry

The Hong Kong 50 Index takes the Hang Seng Index (HSI) as the subject. Its trading symbol is HK50. HSI is prepared by Hang Seng Index Company Limited, which is wholly owned by Hang Seng Bank of Hong Kong. The selected sample stocks consist of a total of 50 major component stocks (i.e., blue-chip stocks). It is an average stock price-weighted index that regards circulations as the weight. The component stocks are four sub-indexes of industry and commerce, finance, real estate, and public utilities, which are calculated by the weighted capital market value method. Their total market capitalization accounts for 65% of all listed shares on the Hong Kong Stock Exchange.

Main features

•   It is stated in Hong Kong dollars

•   It is an average stock price-weighted index that regards circulations as the weight

•   Clearing companies can provide performance bonds

The US Tech100 takes the 100 Index as the subject. Its trading symbol is NAS100(or Tech100). The 100 Index is a stock index consisting of the 100 largest local and international non-financially listed companies on the Stock Exchange of the United States. It is based on market value, and its major companies include Amazon, Comcast, Cisco, eBay, Google, and Yahoo. Its index is different from the S&P 500 Index. In its component stocks, there are no financial institutions or companies outside the United States.

Main features

•   The average daily trading volume of its component stocks reaches 200,000 shares. At the same time, its quarterly reports and annual reports must be submitted as required for strict screening

•   It is a capitalization-weighted index that sets rules to prevent the index from being overly affected by the performance of a giant company

•   It will be reviewed every year and adjusted based on the stock price and the published exchange rate of the preceding year

•   It focuses on the technology industry, so it is highly volatile and changes rapidly

•   It is one of the most authoritative indexes in the world

Japan JPN 225 takes 225 stocks as the subject. Its trading symbol is JPN225. Nikkei 225 Index, also known as the Nikkei Stock Average Index, covers the 225 most representative stocks on the Tokyo Stock Exchange and has been compiled since 1949. Therefore, JPN225 has a long duration and good comparability, and it has become the most commonly used and reliable index for examining the long-term evolution and changes of the Japanese stock market. The list of companies it contains is updated once a year and includes Japanese companies in various fields, such as pharmaceutical companies, financial institutions, and so on.

Main features

•   stated in yen

•   price weighting

•   high liquidity

What am I doing when I trade stock indexes?

The price of the stock index is mainly affected by the stock index. As the stock index is affected by many factors, including macroeconomic data, macroeconomic policies, various information related to component stock companies, trends in international financial markets, investor mentality, and the length of maturity, the price trend of the stock index will also be affected by these factors.

The price of the stock index is mainly affected by the stock index. As the stock index is affected by many factors, including macroeconomic data, macroeconomic policies, various information related to component stock companies, trends in international financial markets, investor mentality, and the length of maturity, the price trend of the stock index will also be affected by these factors.

•   When the short position exceeds demand, the price of the futures contract will fall

•   When the long position exceeds demand, the price of the futures contracts will rise

Low trading cost

Most index dealers do not charge commission but make their money through the bid-ask spread (the difference between the bid and ask prices). The spread offered by TREX trade is lower than most of those offered by its rivals in the index market. Click here to see details

Leverage up to 1:140

Investors can use leverage to increase their investment. The leverage of different products is also different. At present, the leverage of stock index margin trading can be up to 1:140 of the principal amount. For example, if you invest $400,000, you can make a transaction worth $100,000. It should be noted that risk management is very important in stock index trading. High leverage can increase your profits, but it can also bring significant losses.

Commodity trading has the function of hedge

Stock indexes can be traded up or down. There is no difference between the bull and bear markets for stock index trading, which offers traders opportunities in both bull and bear markets.

Strong anti-manipulation ability

The subject of stock indexes is a basket of stocks. If investors hold the stock index heavily, the amount of funds needed is very large. As a result, the stock market index is more difficult to control and manipulate by the minority than a single stock.

Initial margin

Initial Margin refers to the amount of money required to be paid by a trader when placing an order.

Day trade margin and weekend margin

Day Trade Margin refers to the margin amount the customer must have during the trading hours. If they do not, they will be required to offset the position.

Weekend Margin refers to the margin amount the customer must have to carry the position overnight. If they do not, they will be required to offset the position.

Spread

A spread refers to the difference between the bid and ask prices. For traders, the smaller the spread, the lower the cost of trading. In the long run, the spread can greatly affect the general profits or losses of day traders but have little impact on those of mid- and long-term traders.

There are two prices for stock index trading: The buy price is called "BID", and the sell price is called "ASK". A spread refers to the difference between the bid and ask prices.

The calculation mode is provided as follows:

Gross profit or loss = (ASK-Bid) × contract unit × traded lots + overnight interest (if any) - commission (if any).

Example 1:

You trade through TREX trade Platform: buy 20 lots of Tech 100
(1 lot = $ 20), the Bid is 4873.500, you sell your stock indexes at the ASK of 4874.500 on the same day,

Then, the gross profit or loss:

Gross profit or loss = (ASK-Bid) × contract unit × traded lots ± overnight interest - commission
= (4874.500 – 4873.500) x 20 x 20 ± 0 - 0
= $ 400

Example 2:

If you trade through TREX trade Platform: sell 10 lots of China 300
(1 lot = $ 10), the Ask is 3461.2, and you buy your positions at the Bid of 3459.4.

Then, the gross profit or loss:

Gross profit or loss = (ASK-Bid) × contract unit × traded lots ± overnight interest - commission
= (3461.2 - 3459.4) x 10 x 10 ± 0 – 0
= $ 180

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