How to Trade Stock Market Indices S&P500

Submitted by Share Trading on 26 August, 2017 - 10:19

The buzz and excitement of the stock market where fortunes can be made and lost, high profile traders look for opportunity to spread their portfolio across the broad spectrum of many different company stocks. The question is. Can a trader with smaller means do the same? Good news, the answer is YES!

Hi, I'm James and I like you to join me as we discover trading. Today, we are talking about INDICES and in particular, the S&P 500 which is probably the most followed industry of them all, with hope that by the end of this video, you will have a better understanding of what to look for when you are looking to trade this instrument.

So, what is an INDICES (S&P 500)? Let's find out. An INDICES sometimes called INDEX in financial terms is virtual portfolio of securities representing a particular market or sometimes just a portion of it. The S%P 500 stands for Standard and poor 500 as it tracks the 500 most wildly held stocks above the New York stock exchange and NASDAQ. You can find it on our platform under the name US 500

For any company to be a part of the US S&P 500, it must be based in US with a market cap of at least 5.3 Billion. Now the five largest companies in the S&P 500 in 2016 based on market cap included:

  • Apple
  • Google
  • Microsoft
  • Amazon
  • Facebook

The S&P 500 is a measurement of the stock market and it can itself be used as an economic indicator for the health of the US economy. So, what are some of the things to watch out for when you are trading S&P 500 you ask? One of the first things you need to consider is Economic Sentiment.

For a tip; when the market is optimistic, it tends to look to invest into riskier assets like the S&P 500, while when the market is nervous and fearful, it tends to move its money into safe haven like the USD Japanese Yuan, Swiss Franc and Gold.

The S&P 500 also has strong coalitions to other markets, so it’s a good idea to keep an eye on the performance of other indices such as the All Ordinaries, DAX, FTSE 100 when you are trading the S&P 500. To help you analyze the market sentiments, you can often refer to our very own "Inside Viewer"

It’s also a good idea to keep an eye on certain US economic instigators that can affect business growth off the 500 companies listed on the S&P 500. This includes

  • US Gross Domestic Products
  • Unemployment Rate
  • Consumer Price Index
  • Retail Sales

Another thing is to keep an eye on major headlines about some of the 500 companies listed on the S&P 500. For example, as yourself, how is Apple's new product release affecting the company and how could that potentially affect the S&P 500. Another wise tip is to be aware of earnings reports which are often published quarterly by public companies and they show earnings, expenses and net profits.

To summarize, the things to be aware of when you are looking to trade S&P 500 are:

  • Market Sentiment - Risk on, Risk off.
  • Performances of other Indices such as the DAX or FTSE 100
  • US Economic indicators like the US GDP and Retail sales
  • Headlines on certain companies
  • Earnings Report.

Join me next time when we discover oil trading. Till then, thanks for watching and YOU TRADE SAFE! Trade the S&P500 today!

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