Stock Market Index Spread Betting Guide

Stock Market Trading


Live Stock Market Index Chart

The chart below is from Plus500 and it’s based on their CFD prices. Nevertheless, it’s useful for a quick check of the markets.

We have defaulted to the FTSE 100 (UK 100) but you can search for other markets, we’ve also listed the search terms in the ‘stock market names’ table below.



Stock Market Index Spread Betting Comparison

Company Index Min
Stake
UK
100
Spread
Germany
30
Spread
Wall
Street
Spread
S&P
500
Spread
NASDAQ
100
Spread
Japan
255
Spread
Apply
Financial Spreads Review £0.50 0.8 (5) 1 (2) 1 (4) 3 0.5 8 Apply
City Index Review £1 1 (+) 1 (+) 1.6 (+) 6 1 (+) 8 (+) Apply
ETX Capital Review £0.50 1 (2,6) 1 (2,6) 1 (2) 5 1 (2) Variable Apply
IG Review £1-5 1 (4) 1 (5) 1.8 (5.8) 5 (9) 1 (3) 8 (30) Apply
InterTrader Review £1 Variable Variable Variable Variable Variable Variable Apply


Where to Get Live Prices, Charts and Trade Stock Market Indices

All spread betting firms offer the key stock indices and they will always come with live prices and live charts.

A few options include:
  • arrow_forwardFinancial Spreads
  • arrow_forwardIG
  • arrow_forwardInterTrader
  • arrow_forwardETX Capital
(Others include but are not limited to City Index, CMC Markets, DF Markets, GKFX, LCG, OANDA, Spreadex and 3D Markets).


Popular Index Markets

Index Code for Chart
Above
Typical Names
ASX 200 SPI200 AUS 200, ASX 200, ASX, Australia 200
CAC 40 FCE CAC, France 40
DAX 30 FDAX DAX, Germany 30
Dow Jones YM US 30, USA 30, Wall Street, Wall Street 30
FTSE 100 UK100 UK 100
MDAX 50 F2MX Germany MCap, DAX Mid Cap 50, MDAX
NASDAQ 100 NQ US Tech 100, US-Tech 100
Nikkei 225 NIY Japan 225
S&P 500 ES US 500, US 500, SPX 500

Note that the Nikkei really isn’t that popular. It’s not that people don’t want to trade the Japanese stock market it’s more that:
  • arrow_forwardThe trading hours are not very convenient for Europeans
  • arrow_forwardThe European financial press doesn’t write about Japanese firms unless there’s a scandal or a Nintendo story
  • arrow_forwardThe Nikkei has a strange mid-day break

Semi-Popular Index Markets

Index Code for Chart
Above
Typical Names
Euro Stoxx 50 FESX Europe 50, Euro Stocks
Hong Kong Hang Seng HSI Hong Kong, Hang Seng, HK, (careful HK40, HK42, HK43 and HK50 are different markets)
IBEX 35 IBX Spain 35
MIB 40 FIBi Italy 40, FTMIB, MIB

Watch out if you trade some these markets, particularly the Italy 40 and Spain 35. Despite the wide spreads (often around 8pts) these markets are still quite popular.

However, they are often highly volatile. Volatility tends to make a market popular but these are markets are only “semi-popular”, that’s probably because these markets are so volatile it’s very easy to lose quickly on them.

And let’s be fair, many of us follow the markets a lot, but what do we really know about the Italian / Spanish stock markets? or the Italian / Spanish economy? Or the key companies in these stock markets?

Perhaps we know enough to take a medium-long-term view. However spread betting if often a short-term game, if so, most of us know too little, and have too little data to trade these markets.


Unpopular Index Markets

Some markets just aren’t that popular and there are a variety of reasons for this:
  • arrow_forwardAgain, they / the companies that make up the index aren’t covered much in the European financial press
  • arrow_forwardWide spreads
  • arrow_forwardThey are only offered as futures markets
  • arrow_forwardThey are not available on that many platforms (a bit of a self-fulfilling prophesy)

Index Code for Chart
Above/Below
Typical Names
AEX 25 FT Netherlands 25, AEX
Athex 20 FTASE Greece 20
ATX 20 ATX Austria 20
OBX OBX Norway 25
OMX 20 OMXC20CAP Denmark 20, Copenhagen 20
OMX 30 OMXS30 Sweden 30, Stockholm 30
SMI 20 FSM Swiss 20, Switzerland 20
WIG 20 WIG20 Poland 20

Stock Market Guide Prices:

What is a Stock Market Index?

An index is simply a grouping of shares e.g. the FTSE 100 is an index of the companies in the FTSE 100. The DAX 30, aka Germany 30, is an index of the 30 companies in the DAX 30.


Stock Market Index Names – Why Not Use the ‘Normal’ Name?

First things first, for the plural of ‘index’ we tend to write ‘indices’ because we’re based in the UK. The American version is ‘indexes’.

The table below covers the typical names that you’ll see on the spread betting and CFD platforms.

E.g. the FTSE 100 is normally called the UK 100, the Dow Jones is often called the Wall Street or US 30.

Why? It’s all to do with intellectual properly (IP) rights.

For a spread betting company to use a FTSE 100 price feed that is one thing and one nasty cost. Actually using the “FTSE” itself name comes with a very hefty IP price tag.

Editor’s note. IG are the only firm with deep enough pockets to actually pay for the IP rights to say “FTSE 100” on their platform, almost everyone else says “UK 100”.


Why Trade a Stock Market Index?

Indices allow spread bettors to trade on the performance of either a group of shares, or entire stock markets.

Indices are sometimes seen as less risky than investing in individual stocks due to lower levels of volatility with a whole index.

You can sometimes get both “daily rolling bets” and “futures” on indices. Daily rolling bets, aka ‘Daily Funded Bets’ aka ‘DFBs’ are far more popular because of the tighter spreads.

View of 'The City'
What a Lovely View of ‘The City’


How to Spread Bet on a Stock Index

Let’s say you want to spread bet on the FTSE 100 and see a quote of 6370.0 – 6371.0.

This means:
  • arrow_forwardThe Sell price is 6370.0
  • arrow_forwardThe Buy price is 6371.0
I.e. you could bet on the FTSE 100 to go higher than 6371.0 or to go lower than 6370.0.

With financial spread betting, you trade on every unit the market rises or falls.

For the FTSE 100 market a unit is conveniently 1 point of the index’s price movement.

In this case let’s assume you want to bet £3 for every point the FTSE 100 goes up or down.


Spread Betting on the Stock Market Index to Rise

If you go long of the FTSE 100 at 6371, and the index moves up to new level of 6414 – 6415, then you could close your trade at 6414. If so your P&L is calculated as follows:

P&L = (Closing price of the market – Opening price of the market) x stake per point
P&L = (6414.0 – 6371.0) x £3 per point stake
P&L = 43 points x £3 per point
P&L = £129.00 profit

That would be nice. But it’s not always that easy. Markets can, and will, also fall.

If the market were to drop down to, let’s say, 6333.4 – 6334.4, you might want to close your bet to restrict any further losses.

On most platforms you would just click the ‘Close’ button. That would close your buy trade at 6333.4 (i.e. the sell price).

Therefore, with the same £3 per point stake:

P&L = (Closing price of the market – Opening price of the market) x stake per point
P&L = (6333.4 – 6371.0) x £3 per point stake
P&L = -37.6 points x £3 per point
P&L = -£112.80 loss. Oops.

Spread Betting on a Stock Market Index to Fall

Don’t forget that one of the advantages of spread betting and CFD trading is that you can speculate on markets to fall.

Looking at the same example, i.e. with the market at 6370.0 – 6371.0, let’s say you want to sell (aka ‘short’) the market for the same £3 per point stake.

Let’s also say that UK stock market does indeed fall and drop to 6319.6 – 6320.6.

If that happened you might choose to close your trade for a profit, i.e. close your trade at 6320.6. If so your P&L is calculated as follows:

P&L = (Opening price of the market – Closing price of the market) x stake per point
P&L = (6370.0 – 6320.6) x £3 per point stake
P&L = 49.4 points x £3 per point
P&L = £148.20 profit

Of course, the markets do rise. Let’s say the market had gone against your trade and moved up to, for example, 6412.2 – 6413.2.

If so, you might want to close your trade in order to limit your losses. Again, you’d just hit the ‘Close’ button on your platform or app.

This would leave your nursing a loss of £129.60.

P&L = (Opening price of the market – Closing price of the market) x stake per point
P&L = (6370.0 – 6413.2) x £3 per point stake
P&L = -43.2 points x £3 per point
P&L = -£129.60 loss

FTSE 100 rolling daily prices as of 30 June 2016.