A financial index is composed of public companies traded on a particular stock exchange, or drawn from a particular field. The index calculates the collective market performance of all its component companies and publishes the figures. Indices are seen as accurate barometers of market sentiment as well as the strength of an economy. It is possible to open CFD trades on the market performance of several indices, investing in the points change in their values.
There are many prominent indices, as well as less familiar ones from emerging markets available at LCM. Some of the biggest indices include the FTSE 100, S&P 500, NASDQ-100 and DAX. When traded as CFDs, indices generally perform in a similar way to stocks.
Suppose that a company, whose share makes up part of the index on which the client has an open position, announces an ex-dividend date of 12/08/2019.
Please note, that the dividend adjustment will depend on the volume, i.e. the net volume of the client’s open position in lots, the dividend amount, and the size of one lot.
A client has an open position worth 1.5 lots on the WS30 index on the ex-dividend date, where according to the contract specifications, one lot amounts to 10 contracts, and the dividend amount on 12/08/2019 was 1.52 USD. In this case, the dividend adjustment will be calculated as follows:
Dividend adjustment × Contract size × Volume (lots)
1.52 USD × 10 contracts × 1.5 lots = 22.80 USD
If the client’s long position is still open at the beginning of the trading session on 12/08/2019, their trading account will be credited with the dividend adjustment amount of 22.80 USD, while if the client has a short position of equal value open at the beginning of the trading session on 12/08/2019, the dividend adjustment amount of 22.80 USD will be debited from the client’s trading account.
Indices have a fixed leverage independent of your account’s leverage.
You can right-click on any index symbol on market watch and see the margin percentage by clicking on specifications.
You can right-click on any symbol on market watch and see the swap rates and trading hours by clicking on specifications.
You can trade Indices on all LCM account types and platforms including the Desktop trading platform, Mobile trading apps for iOS and Android and Webtrader.
Stock indices are weighted averages reflecting the collective value of publicly-traded companies from a market or industry sector. The change in value of an index represents the fluctuation of the company stocks that make the index. An index will up in price if the overall value of the stock shares rises and will down in the event the overall value of those companies’ shares decline.
Traders can long or short on a particular index. Traders long when the stocks in that index market are likely to increase in the future, or short if they think that the stock index is likely to drop in value.
In financial markets, prices can move quickly and unexpectedly, driven by factors such as economic news, earnings announcements, political changes, or natural disasters. Volatility may provide interesting trading opportunities, but it also increases trading risks. It is important to assess your personal tolerance for risk and adjust your trading approach accordingly in periods of high market volatility.