We’ve compiled a list of some of the best brokers for trading the S&P 500 (SPX) including City Index, IG, CMC Markets, Pepperstone and Saxo Markets. All brokers in this list are authorised and regulated by the FCA and we have personally tested each platform, interviewed the company CEOs, and compared costs, fees, market access, and the different types of account for trading the Standard and Poor’s 500 Index.
Compare S&P 500 (SPX) Trading Platforms
|SP500 Trading Platform||Spreads & Fees||Overnight Financing||CFDs||Spread Betting||DMA||Risk Warning||More Info|
|0.4||SOFR +/-2.5%||✔️||✔️||❌||70% lose money when trading with this provider.||Visit City Index|
|0.005%||na||✔️||❌||✔️||60% lose money when trading with this provider.||Visit IBKR|
|0.5||SOFR +/-3%||✔️||✔️||❌||66% lose money when trading with this provider.||Visit CMC Markets|
|0.4||SOFR+/-2.5%||✔️||✔️||❌||79.3% lose money when trading with this provider.||Visit Pepperstone|
|0.5||SAXO RATE +/-2.5%||✔️||❌||✔️||70% lose money when trading with this provider.||Visit Saxo Markets|
|0.4||SOFR +/-2.5%||✔️||✔️||✔️||73% lose money when trading with this provider.||Visit IG|
|0.6||SOFR +/-3%||✔️||✔️||❌||69% lose money when trading with this provider.||Visit Spreadex|
|0.7||SOFR +/-2.5%||✔️||✔️||❌||77% lose money when trading with this provider.||Visit XTB|
What is the S&P 500?
Standard & Poor’s 500 stock market index (ticker: SPX) is one of the oldest equity benchmarks. Its calculations are based on the market capitalisations of listed companies in the US.
Formed in 1957, the index is now the most popular stock market barometers in the world. According to some estimates, more that US$9 trillion of products are based on the S&P 500 index.
The Index takes the largest 505 stocks in the US exchanges and calculated the index prices based on stock price movements minute by minute. A brief snapshot of the Index is showed below. The largest stock has a market cap of $1.12 trillion. The smallest has a market cap of $2.82 billion.
Can you trade the S&P 500?
Yes, you can, albeit only indirectly. There are multiple financial products derived from the underlying S&P 500 Index that you can trade with, including:
- Exchange-Traded Funds (link)
- Investment Funds
- Spread trading
The biggest ETF based on the S&P 500 Index is the S&P500 ETF (ticker: SPY).
What is the attraction of S&P 500?
It is one of the most followed equity index in the world. SPX is attractive to investors and traders alike because:
- S&P 500 is a highly liquid index – you can buy/sell underlying components easily
- SPX components are a good spread of various sectors. It is not dominated by any one sector (see below).
- SPX is a bellwether of the US economy
Therefore, many trader likes to trade this index, especially during trading hours where liquidity is better.
Source: Standard & Poor’s
What moves the S&P 500?
Stock markets are driven by a wide variety of factors, including some of the following:
- Macro factors (e.g. GDP, unemployment, business indicators etc)
- Monetary factors (e.g., Quantitative Easing, rates movements, yield curve etc)
- Technical factors (e.g., new highs)
If you are trading SPX short term, you will need to pay attention to news flow and data announcements because they can have massive impact on the index over the short term.
Another area to watch out for are Federal Reserve meetings and the release of FOMC minutes. Any change in interest rates beyond market expectations can cause violent swings in the SPX. For example, if investors were expecting a 0.25% hike but the central bank raised it by 0.5% – this may cause prices swing massively after the announcement.
Studying the reaction of the market to these factors are important.
How to trade the S&P 500 using technical indicators?
Trading the S&P profitably requires a good strategy, of which technical indicators could come in handy. Technical indicators include:
- Price action
- Support & resistance levels
- Trend indicators like moving average
- Patterns like breakout and reversals
For example, you may use the moving averages to judge whether the index is still trending or due for a reaction.
Here is how to trade with technical analysis for more information.
Another favourite indicator is a break of resistance or support levels. Look at the S&P 500 ETF (SPY) below. It was clear that the breakout above the 300 key resistance last month resulted in a persistent rally into 310 (see below).
Bear in mind, however, the different traders will gravitate towards different trading styles. Therefore you must find the technical indicators that best support your trading objectives.
Alternative Indices For Standard & Poor’s 500 (S&P 500) Index Trading
You can read about the major indices in our guide to the best indices for index trading.