Why trade indices? (Part 1)
Indices trading is popular for a number of reasons.
Some of the main advantages of indices trading include:
- Plenty of trading opportunities
Stock indices are constantly moving up and down during market hours which means there are always plenty of opportunities for traders and investors to capitalise on.
- The ability to trade in both directions:
When you trade indices with CFDs, you have the ability to trade in both directions. You can go long (buy) an index in order to profit from upward price movements, or you can go short (sell) an index, in order to profit from downward price movements.
- You only need a small amount of capital to start trading:
A key advantage of CFDs is that they enable you to use ‘leverage’ to control a larger amount of money than you have deposited for the trade. For example, with leverage of X2, you can control $2,000 with $1,000. This means that you can start trading indices with a relatively small amount of capital.
Reprinted from eToro, the copyright all reserved by the original author.
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