Learn Everything About Index Trading & Start Trading Indices With Our Leading Platform
What is Index Trading?
Index trading is defined as the buying and selling of a specific stock market index. Investors will speculate on the price of an index rising or falling which then determines whether they will be buying or selling.
Since an index represents the performance of a group of stocks, you will not be buying any actual underlying stock, but the weighted average performance of these stocks, not every stock has the same per cent impact to an index. Big market cap stocks heavily affect the direction of an index. When the price of shares for the companies within an index goes up, the value of the index increases. If the price instead falls, the value of the index will drop.
The ability to go "long" or "short" means that you can take advantage of stock indices prices falling or rising with the help of CFDs or options derivatives.
Diversifying your portfolio among so many companies, by investing money into just one index fund, ensures that the value of your portfolio is not overly correlated with the fortunes of any one company listed in the index.
Lower turnover ratio
The turnover ratio measures the percentage of a fund's holdings replaced in a single year. Index funds have a lower turnover ratio than actively managed funds. Index fund turnover ratios are usually about 1% to 2% per year, compared to 20% or higher for some actively managed mutual funds.
Lower taxes on capital gains
If a fund sells a stock for profit, then the difference between the initial purchase price and the final sale price is considered a capital gain. Funds with higher turnover ratios accrue capital gains more frequently, which results in more taxes owed by the fund's investors.
A major benefit of investing in index funds is that the costs, including taxes and management fees, may be lower than those associated with other types of investment funds.
Individual companies both outperform and underperform the market, but, in general, the overall stock market increases in value over time. As a result, the index can help you identify the trend direction and filter individual investing actions, which makes them an excellent value for any investor.
How Does Index Trading Work?
Pick an index
There are hundreds of different indexes you can track using index funds. The most popular index is the S&P 500 Index, which includes 500 of the top companies in the U.S. stock market.
Choose the right fund for your index
Once you've chosen an index, you can generally find at least one index fund that tracks it. For popular indexes like the S&P 500, you might have a dozen or more choices all tracking the same index.
To buy shares in your chosen index fund, open a brokerage account with one of our brokers that allows you to buy and sell shares of the index fund you're interested in.
Enjoy the Investing Journey
Index funds offer investors of all skill levels a simple, successful way to invest. If you're interested but aren't excited about doing a lot of research, then index funds can be a great solution to achieve your financial goals.
Features of our Index Trading Platform
Global & EU Regulated Network (Soley CFDs for index trading)
ZuluTrade is established globally, it is trusted by millions of users worldwide and is regulated in the EU.
With features like Stop Loss/Take Profit, Negative balance protection and Trailing Stop you can manage your losses and profits at the levels predetermined by you.
The Trading Community
Join the ZuluTrade community, discuss trading ideas and opportunities, or simply follow other traders.
24/5 Live Support
You are our priority! Our friendly Customer Support is always by your side, ready to answer your questions.
Frequently Asked Questions (FAQs)
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Trading spot currencies involves substantial risk and there is always the potential for loss. Because the risk factor is high in the foreign exchange market trading, only genuine "risk" funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the foreign exchange market. No "safe" trading system has ever been devised, and no one can guarantee profits or freedom from loss. Your trading results may vary.
This website does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk involved with trading Forex investments and consult an investment professional before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.
 The hypothetical performance results displayed on this website are hypothetical results in that they represent trades made in a demonstration (“demo”) account. Transaction prices were determined by assuming that buyers received the ask price and sellers the bid price of quotes Zulutrade US receives from the Forex broker at which a Signal Provider maintains a demo account. The hypothetical results do not include any additional mark-ups or commissions which may be charged by a customer’s Forex broker and are based on a one lot trade size. Trades placed in demo accounts are based on a Signal Provider having access to an unlimited amount of funds. As a result, demo accounts are not subject to margin calls and have the ability to withstand large, sustained drawdowns which a customer account may not be able to afford. Trades placed in demo accounts are not subject to price slippage which may occur when a signal is actually traded in a customer account.
The number of pips gained or lost by each Signal Provider may be based on the trading of mini, micro or standard lots. The performance of customers electing to trade a different lot size from those used by a Signal Provider will therefore vary. Further, customers may place trades independent of those provided by a Signal Provider or place customized orders to exit positions which differ from those of a Signal Provider. All performance results presented only include the results of completed trades and do not reflect the profit or loss on open positions. Due to differences in the bid/ask offered by various counterparties, all trades executed in the account of a Signal Provider may not be executed in a customer account if the bid/ask of the Forex broker at which the customer maintains the customer’s account is different from that of the Signal Provider’s broker or due to volatility in the market.
Customers may elect not to follow all of the trading signals provided by the signal providers or be able trade the recommended number of contracts due to insufficient funds in an account. Therefore, the results portrayed are not indicative of an account which may have traded all a Signal Provider’s signals or contracts. Further, by electing to follow a number of different Signal Providers at one time, customers may not be able to follow all of the signals generated due to the customer’s account having insufficient funds. Accordingly, the performance of customer accounts may vary significantly from the results portrayed on this website.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
 THIS COMPOSITE PERFORMANCE RECORD IS HYPOTHETICAL AND THESE TRADING ADVISORS HAVE NOT TRADED TOGETHER IN THE MANNER SHOWN IN THE COMPOSITE. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY MULTI-ADVISOR MANAGED ACCOUNT OR POOL WILL OR IS LIKELY TO ACHIEVE A COMPOSITE PERFORMANCE RECORD SIMILAR TO THAT SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN A HYPOTHETICAL COMPOSITE RECORD AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED. ONE OF THE LIMITATIONS OF A HYPOTHETICAL COMPOSITE PERFORMANCE RECORD IS THAT DECISIONS RELATING TO THE SELECTION OF TRADING ADVISORS AND THE ALLOCATION OF ASSETS AMONG THOSE TRADING ADVISORS WERE MADE WITH THE BENEFIT OF HINDSIGHT BASED UPON THE HISTORICAL RATES OF RETURN OF THE SELECTED TRADING ADVISORS. THEREFORE COMPOSITE PERFORMANCE RECORDS INVARIABLY SHOW POSITIVE RATES OF RETURN. ANOTHER INHERENT LIMITATION ON THESE RESULTS IS THAT THE ALLOCATION DECISIONS REFLECTED IN THE PERFORMANCE RECORD WERE NOT MADE UNDER ACTUAL MARKET CONDITIONS AND THEREFORE, CANNOT COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FURTHERMORE, THE COMPOSITE PERFORMANCE RECORD MAY BE DISTORTED BECAUSE THE ALLOCATION OF ASSETS CHANGES FROM TIME TO TIME AND THESE ADJUSTMENTS ARE NOT REFLECTED IN THE COMPOSITE.