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CFD Indices Trading

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Written By
James Barra
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Written By
James Barra
James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.
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Edited By
Jemma Grist
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Edited By
Jemma Grist
Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.
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Fact Checked By
William Berg
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Fact Checked By
William Berg
William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.
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Updated
Jul 24, 2024

CFD indices trading allows the speculation upon the performance of stock markets or industries as a whole. This article will discuss what indices are, what CFD trading is, top brokers and how to get started. Find out how to start trading CFD indices today.

Best CFD Indices Trading Brokers

Click a broker for details
  1. 1
    UnitedPips
    40% Deposit Bonus
    Ratings
    2 / 5
    3.5 / 5
    3 / 5
    3.8 / 5
    3.5 / 5
    3.5 / 5
    2.8 / 5
    2.5 / 5
    0 / 5
    0 / 5
    $10
    0.01 Lots
    1:1000
    IFSA
    CFDs, Forex, Precious Metals, Crypto
    UniTrader
    PayPal, Credit Card, Debit Card, Perfect Money, Bitcoin Payments, Ethereum Payments
    USD
    Go To UnitedPips
  2. 2
    Interactive Brokers
    Ratings
    4.5 / 5
    3.5 / 5
    4.6 / 5
    4.3 / 5
    3.3 / 5
    3 / 5
    4.4 / 5
    4.3 / 5
    4.3 / 5
    4.5 / 5
    $0
    $100
    1:50
    FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
    Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
    Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
    Cheque, ACH Transfer, Wire Transfer, Automated Customer Account Transfer Service, TransferWise, Debit Card
    USD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF
    Go To Interactive Brokers
  3. 3
    RedMars
    Ratings
    3.3 / 5
    3.5 / 5
    3.8 / 5
    3.5 / 5
    3.8 / 5
    4 / 5
    2.8 / 5
    3 / 5
    4.7 / 5
    4.6 / 5
    €250
    0.01 Lots
    1:30 (Retail), 1:500 (Pro)
    CySEC, AFM
    CFDs, Forex, Stocks, Indices, Commodities, Cryptos
    MT5
    Credit Card, Wire Transfer, Debit Card, Sticpay, FasaPay, Bitcoin Payments, Trustly, PayPal, Skrill, Neteller, Klarna, Mastercard, Visa
    USD, EUR
    Go To RedMars
  4. 4
    IQCent
    20% to 200% Deposit Bonus
    Ratings
    2.5 / 5
    3.3 / 5
    2.4 / 5
    4.3 / 5
    3.8 / 5
    2.5 / 5
    3 / 5
    2 / 5
    4.3 / 5
    4.1 / 5
    $250
    $0.01
    1:500
    IFMRRC
    Binary Options, CFDs, Forex, Indices, Commodities, Crypto
    Online Platform, TradingView
    Credit Card, Debit Card, Wire Transfer, Bitcoin Payments, Ethereum Payments, Visa, Mastercard
    USD, EUR
    Go To IQCent
  5. 5
    Capitalcore
    40% Deposit Bonus up to $2,500
    Ratings
    3.3 / 5
    3.8 / 5
    3.5 / 5
    3 / 5
    3.8 / 5
    3.5 / 5
    2.5 / 5
    3.5 / 5
    0 / 5
    0 / 5
    $10
    0.01 Lots
    1:2000
    IFSA
    Forex, Metals, Stocks, Cryptos, Futures Indices
    WebTrader, Pro
    Ethereum Payments, Mastercard, Visa, Perfect Money, Bitcoin Payments, Debit Card, Credit Card, PayPal
    USD
    Go To Capitalcore
  6. 6
    Sage FX
    $1,500 trading competition
    Ratings
    2.5 / 5
    3.5 / 5
    3 / 5
    3.3 / 5
    2.5 / 5
    3 / 5
    1.3 / 5
    1.8 / 5
    5 / 5
    4.1 / 5
    $10
    0.01 Lots
    1:500
    Pending
    Forex, indices, cryptos
    TradeLocker
    Credit Card, Visa, Mastercard, Bitcoin Payments, Ethereum Payments
    USD, EUR, GBP, CAD, AUD
    Go To Sage FX
  7. 7
    Dukascopy
    10% Equity Bonus
    Ratings
    3.5 / 5
    3.5 / 5
    3.8 / 5
    3 / 5
    4.3 / 5
    4 / 5
    4.5 / 5
    3.5 / 5
    4.6 / 5
    3.7 / 5
    $100
    0.01 Lots
    1:200
    FINMA, JFSA, FCMC
    CFDs, Forex, Stocks, Indices, Commodities, Crypto, Bonds, Binary Options
    JForex, MT4, MT5
    Neteller, Wire Transfer, Mastercard, Skrill, Visa, Maestro, Credit Card, Debit Card, Apple Pay, Bitcoin Payments, Ethereum Payments
    USD, EUR, GBP, CAD, AUD, NZD, JPY, ZAR, TRY, SEK, NOK, DKK, CHF, HKD, SGD, PLN, CZK, AED, SAR, HUF, MXN
    Go To Dukascopy
  8. 8
    Videforex
    20% to 200% Deposit Bonus
    Ratings
    2.5 / 5
    3 / 5
    3.5 / 5
    3.3 / 5
    3.5 / 5
    4.5 / 5
    1.3 / 5
    1.3 / 5
    4.1 / 5
    4.4 / 5
    $250
    $0.01
    1:500
    Binary Options, CFDs, Forex, Indices, Commodities, Crypto
    TradingView
    Skrill, Perfect Money, Bitcoin Payments, Neteller, Credit Card, Visa, Mastercard, Ethereum Payments
    USD, EUR, GBP, AUD, RUB
    Go To Videforex
  9. 9
    xChief
    $100 No Deposit Bonus
    Ratings
    4 / 5
    3.8 / 5
    3.7 / 5
    3 / 5
    4.3 / 5
    3.5 / 5
    3.5 / 5
    3.3 / 5
    4.8 / 5
    4.7 / 5
    $10
    0.01 Lots
    1:1000
    ASIC
    CFDs, Forex, Metals, Commodities, Stocks, Indices
    MT4, MT5
    Wire Transfer, Bitcoin Payments, Credit Card, UnionPay, Skrill, Neteller, WebMoney, Perfect Money, Debit Card, Ethereum Payments, FasaPay, Volet
    USD, EUR, GBP, JPY, CHF
    Go To xChief
  10. 10
    InstaTrade
    Ratings
    2.5 / 5
    3 / 5
    3 / 5
    3 / 5
    3.5 / 5
    3.5 / 5
    3.5 / 5
    3.3 / 5
    4.8 / 5
    4.4 / 5
    $1
    0.01
    1:1000
    BVI FSC
    FISP, CFDs, Forex, Stocks, Indices, Commodities, Cryptos, Futures
    InstaTrade Gear, MT4
    Visa, Mastercard, Wire Transfer, Credit Card, Debit Card, Bitcoin Payments, Ethereum Payments
    USD, EUR, RUB
    Go To InstaTrade

Here is a summary of why we recommend these brokers:

  1. UnitedPips - UnitedPips supports CFD trading on a narrow selection of currencies, metals and cryptos. It somewhat compensates for the meagre asset range with high leverage up to 1:1000, seriously amplifying potential profits or losses, and spreads that don’t change with market conditions.
  2. Interactive Brokers - Over 8,000 CFDs are offered on a vast array of instruments, encompassing stocks, indices, forex, and commodities. Moreover, the TWS platform lends itself to seasoned day traders, offering a comprehensive selection of over 100 order types and algorithms, alongside premium market data sourced from reputable sources such as Reuters and Dow Jones.
  3. RedMars - RedMars caters to various short-term trading styles across popular asset classes, including 7 commodities, 14 indices, and 120+ stocks. Leverage is available up to 1:30 (retail) and 1:500 (pro), amplifying results. However, there is no calculator to help with understanding margin requirements and the depth of investments is limited.
  4. IQCent - CFDs are available on forex, indices, commodities and cryptos, although the range of 100+ instruments is limited compared to alternatives such as Quotex with 400+. Leverage is available up to 1:500 but the $250 minimum deposit is noticeably higher than competitors.
  5. Capitalcore - The range of CFDs at Capitalcore is narrow, with 6 precious metals, 6 indices, and a slim suite of stocks. Notably, there are no commodities such as oil or gas and spreads vary greatly. Tiered leverage is available depending on the account, from 1:100 to 1:2000.
  6. Sage FX - Trade CFDs on forex, stocks, metals, energies, indices, cryptos and dollar futures. Sage FX offers tight spreads and high leverage on all instruments from 1:100 to 1:500.
  7. Dukascopy - Dukascopy offers highly leveraged CFD trading up to 1:200. A wide selection of asset classes are available, including currencies, equities, commodities, ETFs and cryptos. Spreads are tight starting from 0.1 pips and traders get 24/7 support that performed well during testing. However, the real standout is the security provided by trading CFDs through a multi-regulated broker and Swiss bank
  8. Videforex - Videforex CFDs are available on forex, indices, cryptocurrencies and commodities with up to 1:500 leverage and tight spreads from near zero. CFDs incur a commission fee of 1%–2.5% and up to 5% for leveraged trades.
  9. xChief - You can trade a competitive range of CFDs encompassing crypto, indices, energies and metals, with very high leverage up to 1:1000. ECN pricing is available, with spreads from 0.0 pips and low commissions from $2.50. A Cent account is also available for those on a smaller budget.
  10. InstaTrade - InstaTrade offers the flexibility to trade CFDs across various markets, from stocks and indices to forex and commodities. Where it excels is its dynamic leverage up to 1:1000, amplifying potential returns and losses with negative balance protection preventing accounts from falling below zero.

CFD Indices Trading Comparison

CFD Indices Trading Comparison
Broker CFD Leverage Minimum Deposit Minimum Trade Regulators
UnitedPips logo
1:1000 $10 0.01 Lots IFSA
Interactive Brokers logo
1:50 $0 $100 FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
RedMars logo
1:30 (Retail), 1:500 (Pro) €250 0.01 Lots CySEC, AFM
IQCent logo
1:500 $250 $0.01 IFMRRC
Capitalcore logo
1:2000 $10 0.01 Lots IFSA
Sage FX logo
1:500 $10 0.01 Lots Pending
Dukascopy logo
1:200 $100 0.01 Lots FINMA, JFSA, FCMC
Videforex logo
1:500 $250 $0.01 -
xChief logo
1:1000 $10 0.01 Lots ASIC
InstaTrade logo
1:1000 $1 0.01 BVI FSC

UnitedPips

"UnitedPips is ideal for traders seeking leveraged trading opportunities, the security of fixed spreads, and the flexibility to deposit, withdraw, and trade cryptocurrencies - all in one sleek TradingView-powered platform."

Christian Harris, Reviewer

UnitedPips Quick Facts

Bonus Offer40% Deposit Bonus
FTSE SpreadNA
GBPUSD Spread1.3
Stocks SpreadNA
Leverage1:1000
RegulatorIFSA
PlatformsUniTrader
Account CurrenciesUSD

Pros

  • UnitedPips offers impressive leverage up to 1:1000 with zero swap fees or commissions, which can enhance potential returns for day traders and swing traders looking to control prominent positions with less capital.
  • UnitedPips’ platform performs well, with an intuitive design that will appeal to beginners, while the TradingView integration delivers powerful charting tools without overwhelming users, making it straightforward to execute trades efficiently.
  • Although being handed off mid-chat due to shift changes during testing was frustrating, customer support is generally good with quick, helpful responses, and 24/7 support via phone and email for regional teams is a definite advantage.

Cons

  • Unlike brokers such as IG, UnitedPips is an offshore broker not regulated by any 'green tier' financial authorities, raising concerns for traders seeking assurance and protection under well-established regulatory frameworks.
  • UnitedPips' selection of tradable instruments is still minimal, comprising a bare minimum selection of forex, metals and crypto. There are no equities, indices or ETFs, which may be a drawback for experienced traders looking for diverse opportunities.
  • UnitedPips lacks comprehensive research, while the educational content for beginner traders is woeful. Compared to brokers like eToro, which offers tutorials, webinars, and advanced courses, UnitedPips offers minimal resources to help new traders understand key concepts.
Visit UnitedPips
UnitedPips Review

Interactive Brokers

"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."

Christian Harris, Reviewer

Interactive Brokers Quick Facts

FTSE Spread0.005% (£1 Min)
GBPUSD Spread0.08-0.20 bps x trade value
Stocks Spread0.003
Leverage1:50
RegulatorFCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
PlatformsTrader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral, ProRealTime, Quantower
Account CurrenciesUSD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF

Pros

  • The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
  • IBKR is one of the most respected and trusted brokerages and is regulated by top-tier authorities, so you can have confidence in the integrity and security of your trading account.
  • While primarily geared towards experienced traders, IBKR has made moves to broaden its appeal in recent years, reducing its minimum deposit from $10,000 to $0.

Cons

  • TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
  • Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
  • IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.
Visit Interactive Brokers
Interactive Brokers Review

RedMars

"RedMars is the best fit for experienced day traders familiar with the MetaTrader 5 platform and based in the EU, where the broker is authorized by the CySEC. However, the threadbare education and research tools make it unsuitable for beginners."

Christian Harris, Reviewer

RedMars Quick Facts

FTSE Spread15
GBPUSD Spread0.7
Stocks SpreadVariable
Leverage1:30 (Retail), 1:500 (Pro)
RegulatorCySEC, AFM
PlatformsMT5
Account CurrenciesUSD, EUR

Pros

  • RedMars offers one of the best platforms for day trading, MT5, hosting 21 timeframes, dozens of analytical tools, flexible templates and algo trading
  • Getting started on RedMars is incredibly easy - you can be up and running in just a few minutes based on tests
  • The broker is one of a limited number of firms to offer an account specially designed for VIPs with premium support and invites to exclusive events

Cons

  • While RedMars' spreads are within industry averages, they don't offer a significant edge over the cheapest day trading brokers we've personally used, notably IC Markets
  • With just 300 instruments, RedMars offers a narrow trading environment, particularly compared to category leaders like BlackBull Markets which offers 26,000 assets
  • RedMars falls short for newer traders, with little in the way of education, no beginner-friendly platform, a steep minimum deposit, and inadequate support during testing
Visit RedMars
RedMars Review

IQCent

"IQCent will appeal to day traders looking for a straightforward binary options and CFD trading platform with low fees, a range of accounts, and copy trading. Getting started takes less than 1 minute and a $250 deposit. "

Jemma Grist, Reviewer

IQCent Quick Facts

Bonus Offer20% to 200% Deposit Bonus
FTSE Spread1.4
GBPUSD Spread0.8
Stocks SpreadN/A
Leverage1:500
RegulatorIFMRRC
PlatformsOnline Platform, TradingView
Account CurrenciesUSD, EUR

Pros

  • The broker offers up to 98% payouts on binary options, which is more than alternatives like Pocket Option, only offering up to 92%
  • Keen traders can take part in trading contests with cash prizes
  • The broker's 24/7 customer support is fast and reliable, responding within 1 minute during tests

Cons

  • The broker is not overseen by a respected regulator, though this is common among binary options firms
  • The market analysis is very basic with limited technical summaries and insights from analysts
  • IQCent charges a punitive $10 monthly inactivity fee if you fail to place at least 1 trade per month
Visit IQCent
IQCent Review

Capitalcore

"The major selling points of Capitalcore are its high leverage options up to 1:2000 and zero commission or swap fees. However, its weak regulatory oversight from the IFSA and non-existent education place it far behind the top brokers."

Christian Harris, Reviewer

Capitalcore Quick Facts

Bonus Offer40% Deposit Bonus up to $2,500
FTSE Spread25
GBPUSD Spread0.5
Stocks Spread1.5 (Apple)
Leverage1:2000
RegulatorIFSA
PlatformsWebTrader, Pro
Account CurrenciesUSD

Pros

  • The support team are available 24/7 and responded within minutes during testing with helpful responses.
  • Capitalcore is one of the only brokers to charge zero swap fees, which may appeal to Islamic traders looking to comply with Islamic Finance.
  • Unlike most brokers, Capitalcore offers an unlimited demo account that takes under 5 minutes to open.

Cons

  • Capitalcore is not regulated by major financial authorities and has an unproven reputation, raising concerns about the safety of client funds.
  • The web platform was inconsistent during testing, with occasional technical glitches that meant the trading platform wouldn’t load.
  • Platform support is limited to proprietary software, so there's no integration with the market-leading MetaTrader or cTrader, which offer built-in economic news and support automated trading.
Visit Capitalcore
Capitalcore Review

Sage FX

"Sage FX will suit forex traders looking for high leverage and ECN spreads. The broker's prop trading service will also appeal to users looking for funded accounts with up to $200K available."

Tobias Robinson, Reviewer

Sage FX Quick Facts

Bonus Offer$1,500 trading competition
FTSE Spread5.0
GBPUSD Spread0.9
Stocks SpreadN/A
Leverage1:500
RegulatorPending
PlatformsTradeLocker
Account CurrenciesUSD, EUR, GBP, CAD, AUD

Pros

  • Bonus offers and trading competitions
  • Ability to deposit and withdraw via Bitcoin
  • Fast withdrawal processing

Cons

  • Not regulated by any reputable body
  • Lacks educational resources and other extra features
  • Relatively narrow range of asset classes
Visit Sage FX
Sage FX Review

Dukascopy

"If you’re an experienced trader, Dukascopy provides the tools you need: JForex for algorithmic strategies, competitive spreads from 0.1 pips, leverage up to 1:200, and the peace of mind of using a Swiss-regulated bank and broker."

Christian Harris, Reviewer

Dukascopy Quick Facts

Bonus Offer10% Equity Bonus
FTSE Spread100
GBPUSD Spread0.1
Stocks Spread0.1
Leverage1:200
RegulatorFINMA, JFSA, FCMC
PlatformsJForex, MT4, MT5
Account CurrenciesUSD, EUR, GBP, CAD, AUD, NZD, JPY, ZAR, TRY, SEK, NOK, DKK, CHF, HKD, SGD, PLN, CZK, AED, SAR, HUF, MXN

Pros

  • The proprietary JForex platform is highly advanced, offering tools for algorithmic trading, extensive charting, and access to deep liquidity for short-term traders.
  • Dukascopy features some of the best research we’ve seen, even a professional TV studio in Geneva covering financial news, market analysis, and daily insights from professionals.
  • Dukascopy is regulated by the Swiss Financial Market Supervisory Authority (FINMA) as both a broker and a bank, ensuring top-tier financial security and adherence to strict standards.

Cons

  • While Dukascopy provides some educational resources and 24/7 support, the complexity of its platforms and tools required extensive testing and may overwhelm newer traders.
  • Some account types, such as the MT4/MT5 accounts, require a higher minimum deposit of $1,000, which may not be ideal for traders with smaller budgets.
  • Dukascopy's withdrawal fees are higher than most competitors we’ve tested, particularly for bank wire transfers, which may deter traders who require frequent access to their funds.
Visit Dukascopy
Dukascopy Review

Videforex

"Videforex will serve traders looking for a no-frills, easy-to-use platform to speculate on the direction of popular financial markets through binaries. With a sign-up process that takes a matter of minutes and a web-accessible platform, getting started is a breeze. "

William Berg, Reviewer

Videforex Quick Facts

Bonus Offer20% to 200% Deposit Bonus
FTSE SpreadFloating from 0.2
GBPUSD SpreadFloating from 0.1
Stocks SpreadNA
Leverage1:500
PlatformsTradingView
Account CurrenciesUSD, EUR, GBP, AUD, RUB

Pros

  • Videforex is one of the few brokers with 24/7 multilingual video support, providing comprehensive assistance for active traders.
  • Traders can earn up to 98% payouts on 100+ assets with the broker’s binary options, bringing it in line with competitors like IQCent.
  • Videforex regularly runs trading contests, offering practice opportunities and cash prizes to beginners and experienced traders, with position sizes from just ¢0.01.

Cons

  • The client terminal needs improvements based on our latest tests, sporting sometimes slow and unresponsive widgets which could dampen the experience for day traders.
  • Videforex lacks authorization from a trusted regulator, meaning traders may receive little to zero safeguards like segregated client accounts.
  • The absence of any educational tools is a serious drawback for newer traders who can find blogs, videos and live trading sessions at category leaders.
Visit Videforex
Videforex Review

xChief

"xChief continues to prove popular with investors looking to trade highly leveraged CFDs on the popular MetaTrader platforms. The broker's rebate scheme and investment accounts will particularly appeal to seasoned traders. However, the lack of top-tier regulatory oversight is a major drawback."

William Berg, Reviewer

xChief Quick Facts

Bonus Offer$100 No Deposit Bonus
FTSE Spread70
GBPUSD Spread0.9
Stocks Spread50
Leverage1:1000
RegulatorASIC
PlatformsMT4, MT5
Account CurrenciesUSD, EUR, GBP, JPY, CHF

Pros

  • xChief offers STP/ECN execution with low spreads from 0.0 pips and low commission rates starting from $2.50 per side
  • The broker offers a turnover rebate scheme geared towards active investors, as well as trading credits and several other occasional bonuses
  • Traders can access a copy trading solution via the MetaQuotes Signals service

Cons

  • Fees and minimums are imposed on most withdrawal methods, including a €60 minimum for SWIFT bank transfers
  • The broker trails competitors when it comes to research tools and educational resources
  • The total range of 150+ assets is much lower than most competitors who typically offer hundreds
Visit xChief
xChief Review

InstaTrade

"Although InstaTrade offers active trading on a comprehensive platform, it stands out with its fairly unique Fixed Income Structured Product (FISP), providing passive investment opportunities with up to 50% returns in 6 months if conditions are met. "

Christian Harris, Reviewer

InstaTrade Quick Facts

FTSE Spread660
GBPUSD Spread0.2
Stocks Spread8 (Apple Inc)
Leverage1:1000
RegulatorBVI FSC
PlatformsInstaTrade Gear, MT4
Account CurrenciesUSD, EUR, RUB

Pros

  • Despite an average investment offering of around 300 assets, InstaTrade offers a particularly strong suite of currency pairs, catering to advanced traders seeking opportunities in volatile exotics.
  • InstaTrade claims to "guarantee" returns through the structured element of its passive trading solution (FISP), with applications approved within 24 hours.
  • VPS hosting caters to algo trading strategies with a dedicated physical server providing rapid execution speeds as low as 9 milliseconds.

Cons

  • InstaTrade sports one of the most cluttered websites and client cabinets in the industry, potentially overwhelming new traders, especially compared to XTB’s intuitive trading journey and resources.
  • Marketing of the FISP, especially phrasing around the “guarantee of profitability” and the “elimination of risks of trading on financial markets” raises concerns.
  • Profits are only guaranteed in the FISP if investors do not reach the 50% profit level and attract other users with a total sum of $4 for each dollar in compensation.
Visit InstaTrade
InstaTrade Review

What Is An Index?

An index is a financial term for a method of tracking the performance of a market or a group of assets in a set, uniform way.

Indices can follow specific stock markets, like the ASX, or areas of economies and industries, like the top technology stocks, top non-technology stocks, etc.

Additionally, indices can encapsulate an entire market, such as the TAIEX which tracks the performance of the Taiwan Stock Market as a whole. Within finance, you cannot invest directly in an index.

Indexes may have different methods for calculating their value and weighting their constituents. Generally, an index would have a base value, e.g. 100, and a base year.

The value would then increase or decrease based on the performance of the index’s constituents.

The change in the value of an index is often more important than the value itself, as that indicates if the market is growing or not.

CFD indices trading is popular in markets across the world. Some of the most commonly-traded indices include:

FTSE 100

The FTSE 100 is a UK stock market index that tracks the performance of the shares of the best 100 enterprises listed on the London Stock Exchange (LSE).

Note, just because the index tracks London Stock Exchange-listed stocks, that doesn’t mean that only UK-based companies can be found there. This index is maintained by the FTSE Group, which is a subsidiary of the London Stock Exchange Group. The FTSE 100 is one of the most popular instruments for CFD indices trading.

CFD indices and index trading strategy tips

NASDAQ 100

This is a US index of the 100 largest non-financial companies that are listed on the NASDAQ stock exchange. The weights of stocks in the index are based on their market capitalisations, with rules implemented to cap the influence of the larger listed securities. You can find an index consisting only of the financial companies in a separate index called the NASDAQ Financial-100.

Dow Jones

This is a US index of the largest 30 companies that are listed on the New York Stock Exchange (NYSE).

S&P 500

This is a US index of the 500 companies that have the largest market capitalisation. This is favoured for CFD indices trading as it tracks a massive portion of the US economy.

DAX

This is a German index that tracks the performance of the largest 40 companies listed on the Frankfurt Stock Exchange. Although not as big a market as some others, it remains quite popular for CFD indices trading due to more regular market movements.

Why Are Indices Suitable For CFD Trading

CFD indices trading involves speculating on some of the best-performing companies in global markets. This provides diversified exposure to the underlying market without having to invest in individual companies, spreading the risk.

This in turn means that there is a reduction in the possibility of wild market movements in reaction to sudden news releases.

In addition, as an investor, you do not have to carry out as much in-depth technical analysis of individual companies when CFD indices trading.

Your investment will likely be spread over several industry sectors, reducing the stress of having to manually identify potential stocks worth looking into.

Moreover, CFD indices trading is possible throughout the day and is not necessarily limited to normal stock trading hours.

Pros

Cons

Strategies

Follow The News

Before deciding what index you want to speculate upon using CFD indices trading, keeping yourself up-to-date on the latest financial news is paramount.

Changes in local laws can have a huge effect on any indices based in the area and being able to spot where the market is likely to head will place you in a better position to make the right choices.

More importantly, this will allow you to stay aware of possible future movements, reducing the chances of the market catching you off guard.

Hedging

Since CFD indices trading allows you to sell (“short”) the index, it is often used to hedge existing investments.

If your portfolio consists of several stocks from the same index and you expect there to be a sudden decline in the market, you can short the index with CFDs to offset the losses you would see from your main investment, reducing your downside exposure.

Check that your broker permits hedging prior to trading.

How To Start CFD Indices Trading

Choosing A Broker

To begin your CFD indices trading journey, you must first find a CFD broker that offers the right instruments. When doing your research, it is helpful to consider the following points:

There are lots of different brokers that can offer you CFD indices trading on commercial or proprietary platforms, including City Index and Fineco Bank. Choosing the right broker could mean the difference between success or failure when CFD indices trading, see our list of top recommendations here.

Opening Your Position

As a rule of thumb, you should never invest more than you are comfortable losing. Most CFD indices trading platforms are easy to use, and entering/exiting your position is quick and simple. You will be presented with the options to buy (long) or sell (short) your chosen index.

Going long when CFD indices trading means that you expect the value rise to rise while going short is the position to take when you expect price drops. Most broker platforms offer you extensive information about different instruments, showcasing their data history to help inform your decisions.

Monitoring Your Position

You should keep a close eye on your positions once you open them, putting in place automated exit strategies if possible. If you think that your position is going to start failing, you should exit it to avoid losses. Some platforms allow you to place automated limits, called stop orders, which, once hit, will exit your position for you.

However, the negative balance protection offered by brokers is less a guarantee than a target, as severely unfavourable trading conditions, often coupled with lots of leverage, can still result in you losing a lot of money. Rapid and volatile changes in the market can sometimes be too quick for loss prevention strategies to react to.

Tips For CFD Indices Trading

Here are some useful tips that could help you during your CFD indices trading journey.

Final Word On CFD Indices Trading

CFD indices trading is a great way for retail traders to access the indices markets without needing to physically invest in funds and trackers, simply making money from correct speculation of an index’s price movements. Leveraged trading is offered by most CFD brokers and allows profits to be magnified and markets to be accessed for less capital, though losses are also amplified. If you wish to begin CFD indices trading, check out our top CFD brokers.

FAQs

How Do CFDs Work?

CFD indices trading allows investors to speculate on the future performance of a market without needing to own the particular asset. CFDs are often more accessible than spot products and traders can trade in both bullish and bearish markets.

What Is An Index?

An index is a financial term for a method of tracking the performance of a market or a group of assets in a particular set. CFD indices trading involves taking out the derivatives contracts on index trackers.

What Is Going Long/Short When CFD Indices Trading?

When you buy “long”, you are predicting that the index will go up in value. When you sell “short”, you are predicting the opposite, that the index is going to decrease in value. If your predictions are correct, you will make money on your trade, and vice versa if you are wrong.

Are Trading Hours the Same Across All CFD Indices Trading Instruments?

No. CFD indices trading hours vary from index to index. Some indices may be 24-hours, while others follow the opening hours of the equities markets they are based on.

Do I Have To Pay Stamp Duty On My CFD Index Trades?

No, CFD indices trading is exempt from stamp duty in the UK. However, other countries may have different taxation policies, you can check out our CFD taxes page for an overview, though it is recommended you speak to a qualified advisor before making any tax-related financial decisions.