If you only trade forex, you're missing out. I didn't start trading indices until my third year, and I regret not learning them earlier. Indices are cleaner, more trend-driven, and — in some ways — easier to trade than forex pairs.
What Are Index CFDs?
An index CFD tracks the price of a stock market index — a basket of the largest companies in a specific market. When you trade US30 (Dow Jones), you're effectively trading 30 of America's biggest companies as one instrument.
Common index CFDs:
- SPX500 (S&P 500): 500 largest US companies. The benchmark for US equities. Broad, stable, heavily traded.
- NAS100 (NASDAQ 100): 100 largest non-financial companies on Nasdaq. Heavy tech exposure (Apple, Microsoft, Nvidia, Amazon, Meta). Higher volatility than SPX500.
- US30 (Dow Jones): 30 major US companies. Old economy heavy. Less volatile than NAS100.
- FTSE100 (UK 100): 100 largest UK companies. Heavy in financials, mining, energy.
- GER40 (DAX 40): 40 major German companies. Industrial-heavy, auto sector exposure.
- JP225 (Nikkei 225): 225 major Japanese companies. Yen-sensitive.
Why I Trade Indices
Three reasons:
- Clean technicals: Indices trend better than forex. The S&P 500 has been in a long-term uptrend for decades. I can draw a trendline on the weekly chart and trust it more than any forex pair.
- No overnight gap risk on individual stocks: A CFD on an index diversifies single-stock risk. If Apple drops 5% on bad news, NAS100 might only drop 0.5% because the other 99 companies balance it.
- Macro clarity: Indices move on the same fundamentals — interest rates, economic data, earnings season. If I can read the macro picture, I can trade any index.
When to Trade Indices
- US cash open (9:30am ET, 1:30pm GMT): The most volatile period. Indices often establish daily direction in the first 30-60 minutes.
- Pre-market (7-9:30am ET): Lower liquidity, but important for positioning. Futures trade during this window.
- European open (8am GMT): STOXX600, DAX40, FTSE100 active.
- Asian session: Nikkei225 most active during Tokyo hours.
The Best and Worst Times
Best: US cash session (9:30am-4pm ET), especially the first 2 hours. Worst: Asian session for US indices (thin liquidity, wide spreads), and the 30 minutes before major economic releases (CPI, NFP, FOMC).
Indices Spreads and Costs on EBC
From my trading:
- SPX500: 0.5-1.0 points spread during US session. Tight enough for swing and position trading.
- NAS100: 0.8-1.5 points. Wider due to higher per-point value.
- US30: 1.5-2.5 points. Reasonable for a 25,000-point instrument.
- FTSE100/DAX40: 0.8-1.2 points during European session.
EBC PRO account: raw spreads + $6/round lot commission. The cost structure is straightforward.
A Note on Leverage
Indices are less volatile than gold on a percentage basis, but point values are large. A 10-point move on SPX500 might be $50 on a 0.1 lot. Size carefully. Don't let the seemingly small percentage moves fool you — indices can trend for weeks without a major pullback.
My Index Trading Strategy
I keep it simple:
- SPX500 for long-term trend: I hold SPX500 positions for days to weeks based on macro conviction. If the Fed is dovish, I'm long US equities. Period.
- NAS100 for volatility: When tech has momentum, NAS100 moves faster than SPX500. I trade NAS100 for quicker setups.
- FTSE100 for dividends and defensives: UK equities are more value-oriented. I trade FTSE100 when I want exposure to energy and mining without gold-specific risk.
If you're new to index trading, start with SPX500. It's the most liquid, most predictable, and most forgiving of the major indices. Learn its patterns — the US session ramp, the lunch-time drift, the final-hour push — before you try NAS100 or GER40.