Best Index Trading Platforms

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Index brokers provide access to indices markets such as the FTSE, DAX, and S&P for the purposes of trading, speculation, and hedging. These indices are made up of individual shares traded on stock exchanges. For example, the FTSE 100 is an index of the biggest 100 publically listed shares traded on the London Stock Exchange. We have tested, ranked, compared and reviewed some of the best brokers for indices trading in the UK to help you choose the most appropriate account for your trading strategy. 

City Index: Best index trading tools

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City Index
  • Indices available: 40
  • Minimum deposit: £100
  • Account types: CFDs & spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 3.5, NASDAQ 1, S&P 0.4
  • GMG rating:
    (4.1)
  • Customer rating: 3.6/5 (86 reviews)

69% of retail investor accounts lose money when trading CFDs with this provider

City Index Indices Trading Review
City Index

Name: City Index Indices Trading

Description: Trade major global indices at City Index like the UK 100, Wall Street and Germany 40. Choose a spread betting or CFD trading account and get tight spreads on European, US, Asian and Australian indices. City Index also provide trading signals through and post trade analytics to provide trading ideas and improve your performance.
70% of retail investor accounts lose money when trading CFDs with this provider

Is City Index good for indices trading?

Yes, you can trade around 40 indices with City Index, which is more than the majority of trading platforms. As the name suggests City Index started out as an indices broker, as remarkably indices have always been more popular than forex trading with UK traders. City Index are towards the top of the range when it comes to indices on offer, mid-range when it comes to index spreads and one of the best brokers for index trading signals (as they provide their own rather than buying them in from a firm like Acuity Trading).

  • Indices available: 40
  • Minimum deposit: £100
  • Account types: CFDs & spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 3.5, NASDAQ 1, S&P 0.4

City Index Trading Platform

Pros

  • Index trading signals
  • Post-trade index analytics
  • Good education and analysis program

Cons

  • No DMA index trading
  • Limited index options as a CFD or spread bet
  • Pricing
    (4)
  • Market Access
    (4)
  • Online Platform
    (4)
  • Customer Service
    (4)
  • Research & Analysis
    (4.5)
Overall
4.1

Pepperstone: Best for MT4 & MT5 index trading

Pepperstone
  • Indices available: 28
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 2, NASDAQ 1, S&P 0.4
  • GMG rating:
    (3.9)
  • Customer rating: 4.6/5 (61 reviews)

75.3% of retail investor accounts lose money when trading CFDs with this provider

Pepperstone Indices Trading Review
Pepperstone

Name: Pepperstone Indices Trading

Description: Pepperstone sources razor-sharp pricing, from multiple Tier 1 banks and liquidity providers, with competitive fixed spreads as low as 1 point on UK100, 0.9 on GER40, with no commissions. 99.99% fill rate*, fast execution and no dealing desk intervention. Quick and easy account opening. Apply for your trading account in few minutes.
75.6% of retail investor accounts lose money when trading CFDs with this provider.

Summary

  • Indices available: 28
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 2, NASDAQ 1, S&P 0.4

Pepperstone Trading Platform

Pros

  • Good for automated index trading
  • Lots of indices on MT4 & MT5
  • Tight index spreads

Cons

  • No DMA index trading
  • No index options
  • Pricing
    (4.5)
  • Market Access
    (4)
  • Online Platform
    (3.5)
  • Customer Service
    (4)
  • Research & Analysis
    (3.5)
Overall
3.9

Spreadex: Best index trading platform for customer service

Spreadex Trading
  • Indices available: 30
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 4, NASDAQ 2, S&P 0.6
  • GMG rating:
    (4.2)
  • Customer rating: 4.2/5 (177 reviews)

72% of retail investor accounts lose money when trading CFDs with this provider

Spreadex Indices Trading Review
Spreadex Trading

Name: Spreadex Indices Trading Review

Description: Spreadex offers 24 hour indices trading via financial spread betting or Contracts For Difference on the world’s major stock indices – with spreads on the most popular markets from 1pt on UK 100, 1pt on Germany 40 & 1.7pts on Wall Street.
72% of retail investor accounts lose money when trading CFDs with this provider.

Summary

  • Indices available: 30
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 4, NASDAQ 2, S&P 0.6

Spreadex Indices Trading

Pros

  • Excellent customer service
  • Low minimum deposit
  • Easy-to-use index trading platform

Cons

  • Limited index options trading
  • No DMA index trading
  • Pricing
    (4)
  • Market Access
    (4)
  • Online Platform
    (4)
  • Customer Service
    (5)
  • Research & Analysis
    (4)
Overall
4.2

IG: Best for index liquidity and high-volume traders

IG
  • Indices available: 80+
  • Minimum deposit: £250
  • Account types: CFDs, spread betting, DMA, investing
  • Index pricing: FTSE 1, DAX 1, Dow 2.4, NASDAQ 1, S&P 0.4
  • GMG rating:
    (4.2)
  • Customer rating: 3.9/5 (523 reviews)

71% of retail investor accounts lose money when trading CFDs and spread bets with this provider.

IG Indices Trading Review
IG

Name: IG Indices Trading

Description: Trade over 80 indices with the world’s No.1 spread betting and CFD provider. Trade with deep liquidity on spreads from 1 point on the FTSE 100, 1.2 on the Germany 40 and 0.4 on the US 500. IG also offers indices trading on weekends when the main markets are closed.
70% of retail investor accounts lose money when trading CFDs and spread bets with this provider.

Summary

  • Indices available: 80+
  • Minimum deposit: £250
  • Account types: CFDs, spread betting, DMA, investing
  • Index pricing: FTSE 1, DAX 1, Dow 2.4, NASDAQ 1, S&P 0.4

IG Indices Trading

 

Pros

  • Excellent index liquidity
  • Wide range of indices to trade
  • Good index trading signals and analysis

Cons

  • No index futures
  • Index options only available as a CFD or spread bet
  • Pricing
    (4)
  • Market Access
    (4.5)
  • Online Platform
    (4.5)
  • Customer Service
    (4)
  • Research & Analysis
    (4)
Overall
4.2

Interactive Brokers: Best for on-exchange index trading

Interactive Brokers
  • Indices available: 13
  • Minimum deposit: £2,000
  • Account types: CFDs, DMA, futures & options, investing
  • Index pricing: FTSE 0.005%, DAX 0.005%, Dow 0.005%, NASDAQ 0.005%, S&P 0.005%
  • GMG rating:
    (4.2)
  • Customer rating: 4.4/5 (758 reviews)

60% of retail investor accounts lose money when trading CFDs with this provider

Interactive Brokers Indices Trading Review
Interactive Brokers

Name: Interactive Brokers Indices Trading

Description: Interactive Brokers has transparent, low commissions and financing rates equity indices can be traded in lots as small as 1X the index level. Unlike the related futures, Index CFDs do not expire, saving rollover-related costs and risks.
60% of retail investor accounts lose money when trading CFDs with this provider.

Summary

  • Indices available: 13
  • Minimum deposit: £2,000
  • Account types: CFDs, DMA, futures & options, investing
  • Index pricing: FTSE 0.005%, DAX 0.005%, Dow 0.005%, NASDAQ 0.005%, S&P 0.005%

Interactive Brokers Trading Platform

Pros

  • Low-cost index trading
  • On-exchange index futures and options
  • Excellent index trading platform and apps

Cons

  • No index financial spread betting
  • No guaranteed stops
  • Pricing
    (4.5)
  • Market Access
    (4.5)
  • Online Platform
    (4.5)
  • Customer Service
    (3.5)
  • Research & Analysis
    (4)
Overall
4.2

CMC Markets: Best for low-cost index CFD trading

CMC Markets
  • Indices available: 80+
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 2, NASDAQ 1, S&P 0.5
  • GMG rating:
    (4)
  • Customer rating: 3.6/5 (107 reviews)

74% of retail investor accounts lose money when trading CFDs with this provider

CMC Markets Indices Trading Review
CMC Markets

Name: CMC Markets Indices Trading

Description: CMC Markets lets you trade on over 80 cash and forward global indices based on the FTSE 100 and more, with leverage, on an award-winning spread betting and CFD platform. Trade indices with tight spreads, lightning-fast execution and the highest-rated customer service in the industry.
74% of retail investor accounts lose money when trading CFDs with this provider.

Summary

  • Indices available: 80+
  • Minimum deposit: £1
  • Account types: CFDs, spread betting
  • Index pricing: FTSE 1, DAX 1, Dow 2, NASDAQ 1, S&P 0.5

CMC Markets Trading Platform

Pros

  • Excellent client index trading sentiment
  • Tight spreads on major indices
  • Very good index trading platform

Cons

  • No index ETF investing
  • No DMA index trading
  • Pricing
    (4)
  • Market Access
    (4)
  • Online Platform
    (4)
  • Customer Service
    (4)
  • Research & Analysis
    (4)
Overall
4

Saxo Markets: Best for DMA indices trading

  • Indices available: 29
  • Minimum deposit: £1
  • Account types: CFDs, futures & options, DMA, investing
  • Index pricing: FTSE 1, DAX 1, Dow 3, NASDAQ 1, S&P 0.5
  • GMG rating:
    (4.3)
  • Customer rating: 3.6/5 (52 reviews)

70% of retail investor accounts lose money when trading CFDs with this provider

Saxo Markets Indices Trading Review

Is Saxo good for indices trading?

Yes, with Saxo you can trade 29 index-tracking CFDs with fast and reliable access to the markets from your phone, tablet, laptop or multi-screen desktop setup. The award-winning, multi-device SaxoTraderGO partners seamlessly with SaxoTraderPRO, giving a professional-grade platform for advanced index traders.<BR>65% of retail investor accounts lose money when trading CFDs with this provider

Saxo Markets Trading Platform

Pros

  • DMA index trading
  • Low commissions
  • Excellent analysis and data

Cons

  • No index spread betting
  • Pricing
    (4)
  • Market Access
    (4.5)
  • Online Platform
    (4.5)
  • Customer Service
    (4.5)
  • Research & Analysis
    (4)
Overall
4.3

XTB: Good Index trading educational material

XTB
  • Indices available: 25
  • Minimum deposit: £1
  • Account types: CFDs
  • Equity overnight financing: -0.02341% / -0.00159% DAILY
  • Pricing: FTSE 1.7, DAX 1, Dow 3, NASDAQ 1, S&P 0.5
  • GMG rating:
    (3.9)
  • Customer rating: 4.7/5 (117 reviews)

81% of retail investor accounts lose money when trading CFDs with this provider

XTB Indices Trading Review
XTB

Name: XTB Indices Trading

Description: One of the good things about index trading with XTB, is that you can see market depth on the sidebar when trading indices. I’ve included that as a screenshot in the index trading platform tab below. This may not be such an issue if you are a smaller trader, but if you are dealing in size then people able to see what volume you will get filled in is very handy. You can also deal direct from the charts, so if you use the crosshairs function, you can quickly place orders around key support and resistance levels.
81% of retail investor accounts lose money when trading CFDs with this provider.

Summary

  • Indices available: 25
  • Minimum deposit: £1
  • Account types: CFDs
  • Equity overnight financing: -0.02341% / -0.00159% DAILY
  • Pricing: FTSE 1.7, DAX 1, Dow 3, NASDAQ 1, S&P 0.5

XTB Index Trading Platform

Pros

  • Multi-asset trading
  • Competitively priced
  • Lots of markets to trade

Cons

  • Not UK HQ’d
  • No basket trading
  • Pricing
    (4)
  • Market Access
    (3.5)
  • Online Platform
    (4)
  • Customer Service
    (4)
  • Research & Analysis
    (4)
Overall
3.9

eToro: Best for copying other index traders

eToro
  • Indices available: 15
  • Minimum deposit: $50
  • Account types: CFDs & investing in USD
  • Index pricing: FTSE 1, DAX 1.5, Dow 6, NASDAQ 2.4, S&P 0.75
  • GMG rating:
    (3.6)
  • Customer rating: 3.4/5 (223 reviews)

51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money

eToro Indices Trading Review
etoro

Name: eToro Indices Trading

Description: With eToro you can trade index CFDs or buy index-tracking ETFs. The social trading platform is easy to use and offers traders and investors the opportunity to trade a wide range of major stock indices as well as see and copy other traders positions.
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money

Summary

  • Indices available: 15
  • Minimum deposit: $50
  • Account types: CFDs & investing in USD
  • Index pricing: FTSE 1, DAX 1.5, Dow 6, NASDAQ 2.4, S&P 0.75

eToro Trading Platform

Pros

  • Social and copy index trading
  • Easy-to-use platform
  • Can change your index leverage

Cons

  • Accounts must be in USD
  • High FX conversion charges
  • Index pricing can be wide
  • Pricing
    (3.5)
  • Market Access
    (3.5)
  • Online Platform
    (4)
  • Customer Service
    (3.5)
  • Research & Analysis
    (3.5)
Overall
3.6

Tickmill: Index trading micro futures on CQG

Tickmill
  • Indices available: 10
  • Minimum deposit: £100
  • Account types: CFDs, futures
  • Index pricing: FTSE 0.9, DAX 0.91, Dow 2.52, NASDAQ 1.93, S&P 0.39
  • GMG rating:
    (3.9)
  • Customer rating: 0.0/5 (0 reviews)

75% of retail investor accounts lose money when trading CFDs and spread bets with this provider

Tickmill Indices Trading Review
Tickmill

Name: Tickmill Indices Trading

Description: If you only want to trade the top ten indices as part of your overall trading, then Tickmill is a good option as they offer DMA futures trading on CQG as well as tight spreads on index CFDs on MT4 & MT5.
75% of retail investor accounts lose money when trading CFDs and spread bets with this provider.

Summary

  • Indices available: 10
  • Minimum deposit: £100
  • Account types: CFDs, futures & options
  • Index pricing: FTSE 0.9, DAX 0.91, Dow 2.52, NASDAQ 1.93, S&P 0.39

Tickmill Index Trading Platform

Pros

  • DMA index futures trading
  • Low-cost CFD indices
  • Lots of index trading platforms

Cons

  • No UK shares
  • Only the most popular indices
  • Pricing
    (4)
  • Market Access
    (3.5)
  • Online Platform
    (4)
  • Customer Service
    (4)
  • Research & Analysis
    (4)
Overall
3.9

Methodology: We have chosen what we think are the best brokers for indices based on:

  • over 17,000 votes in our annual awards
  • our own experiences testing the index trading platforms with real money
  • an in-depth comparison of the features that make them stand out compared to alternatives.
  • interviews with the index broker CEOs and senior management

Compare Index Trading Platforms

Index Trading PlatformIndices AvailableMinimum DepositGMG RatingMore InfoRisk Warning
City Index Indices Trading40£100
(4.1)
See Platform69% of retail investor accounts lose money when trading CFDs with this provider
Pepperstone Indices Trading28£1
(3.9)
See Platform75.3% of retail investor accounts lose money when trading CFDs with this provider
IG Indices Trading80+£250
(4.2)
See Platform71% of retail investor accounts lose money when trading CFDs and spread bets with this provider.
Spreadex Indices Trading30£1
(4.2)
See Platform64% of retail investor accounts lose money when trading CFDs with this provider
Saxo Markets Indices Trading29£1
(4.3)
See Platform65% of retail investor accounts lose money when trading CFDs with this provider
Interactive Brokers Indices Trading13£1
(4.2)
See Platform62.5% of retail investor accounts lose money when trading CFDs with this provider
XTB Indices Trading25£1
(3.9)
See Platform77% of retail investor accounts lose money when trading CFDs with this provider
CMC Markets Indices Trading80+£1
(4)
See Platform69% of retail investor accounts lose money when trading CFDs with this provider
eToro Indices Trading15$10
(3.6)
See Platform51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Tickmill Indices Trading10£100
(3.9)
See Platform71% of retail investor accounts lose money when trading CFDs and spread bets with this provider
Forex.com Indices Trading40£1
(4.1)
See Platform69% of retail investor accounts lose money when trading CFDs with this provider.
ThinkMarkets27£10
(4)
See Platform66.95% of retail investor accounts lose money when trading CFDs with this provider

Beginners

City Index is a good broker for beginners as they have a simple trading platform with 40 major indices to trade as CFDs and spread bets. They also provide a lot of educational material, and have trading signal on indices which show potentially good times to buy and sell through two signal providers.

This matrix of index brokers shows which indices trading platform offer features that can benefit new traders.

Beginner Features:City IndexInteractive BrokersCMC MarketsPepperstoneSpreadex Trading ReviewSaxo Markets ReviewIGXTBetoro
Trading Signals✔️✔️✔️✔️✔️✔️✔️
Webinars✔️✔️✔️✔️✔️✔️✔️✔️✔️
Seminars✔️✔️✔️✔️✔️
Leverage Control✔️
Low-Risk Products✔️✔️✔️✔️
Investment Account✔️✔️✔️✔️

Advanced & Professional Traders

Saxo Markets is the best broker for sophisticated and high-net-worth index traders as their platform is geared towards professional traders placing large orders. They also have some complex order functionality and direct markets access to global exchanges through futures and options.

This comparison table shows what index brokers offer functionality for advanced index traders.

Advanced Features:City IndexInteractive BrokersCMC MarketsPepperstoneSpreadex Trading ReviewSaxo Markets ReviewIGXTB
Voice Brokerage✔️✔️✔️✔️✔️
Corporate Accounts✔️✔️✔️✔️✔️✔️✔️✔️
Level-2✔️✔️✔️
Algo Trading✔️✔️✔️✔️
Prime Brokerage✔️✔️✔️✔️

Market Access

IG and CMC Markets both offer over 80 indices for trading as a spread bet or CFD.

This table shows which brokers offer access to the most indices as well as peripheral markets.

Market Access:ig reviewpepperstone reviewsaxo capital makets review

Interactive BrokersSpreadex TradingCapital.com
Total Markets120001700011000120090005233100008,00037002,100
Forex Pairs845133862182100542013857
Commodities253812432192020102822
Indices21348228291317102325
UK Stocks3500392574519250005001575na450230
US Stocks100063524968880200035002110na15751080
ETFsn/a200010841076751100160na0138

Commissions & Fees

CMC Markets is one of the cheapest brokers for indices, with some of the tightest spreads for CFDs and spread betting on the major exchanges.

As well as our index cost comparison, you can use our trading fee calculator to see how much it will cost you to trade over a year with various different brokers.

Trading Costsig reviewpepperstone reviewsaxo capital makets review

Interactive BrokersSpreadex TradingCapital.com
FTSE 100111110.01%1111.7
DAX 301.21.210.910.01%1.21.21.81
DJIA3.52.422.430.01%42.453
NASDAQ111110.01%211.91
S&P 5000.40.40.50.40.50.01%0.60.40.70.5
EURUSD0.50.60.70.090.60.00%0.60.60.80.9
GBPUSD0.90.90.90.280.70.00%0.90.91.31.4
USDJPY0.60.70.70.140.60.00%0.70.70.81.4
Gold0.80.30.30.050.60.00%0.40.30.280.35
Crude Oil0.30.28320.50.00%30.280.43
UK Stocks0.0080.0010.0010.0010.00050.02%0.0020.0010.30%0.0008

Account Types

Saxo Markets provides the most ways to trade indices as they offer index CFDs as well as on exchange traded futures, options and ETFs. The only type of index trading Saxo Markets does not offer is spread betting, where profits are tax free in the UK. If you would like to trade indices as a spread bet IG also offer spread betting, CFDs and physical ETFs, although no DMA futures and options.

Use our comparison table of what we think are the best index trading platforms to compare how many indices they offer, commission and spreads on the most popular indices and what different types of account they offer. 

Account Types:City IndexInteractive BrokersCMC MarketsPepperstoneSpreadex Trading ReviewSaxo Markets ReviewIGXTB
CFD Trading✔️✔️✔️✔️✔️✔️✔️✔️
Spread Betting✔️✔️✔️✔️✔️✔️
DMA✔️✔️✔️
Pro Accounts✔️✔️✔️✔️✔️✔️✔️
Investments✔️✔️✔️
Futures & Options✔️✔️

Index brokers provide access to stock market indices markets via:

  • Index Futures– these index brokers provide professional traders with direct market access to indices traded on exchange.
  • Index Options– these index brokers options trading to professional traders on-exchange. In some cases, stock brokers will offer index options for clients that want to hedge a portfolio.
  • Index CFDs – these index brokers provide CFDs (contracts for difference) which are ideal for traders that want to trade in smaller size than index futures.
  • Index Spread Betting – these index brokers let their clients bet on the price movements of an index. As trades are structured as bets, there is no capital gains tax due on index spread betting profits
  • Index ETFs – Index ETFs are listed on stock exchanges and can be bought and sold in a similar way to shares and can track the price of an index. They are useful for investors that want exposure to an indices’ overall performance but do not want to buy an actively managed index fund or index derivatives. As they are listed on stock exchanges, they are available through share dealing platforms, CFD trading platforms and spread betting brokers.

⚠️ FCA Regulation

All index trading platforms that operate in the UK must be regulated by the FCA. The FCA is the Financial Conduct Authority and is responsible for ensuring that UK index trading platforms are properly capitalised, treat customers fairly and have sufficient compliance systems in place. We only feature index trading platforms that are regulated by the FCA, where your funds are protected by the FSCS.

How to trade indices – index trading explained

To trade indices you need an index broker like IG, Saxo Markets or Interactive Brokers that can give you access to indices through OTC products like CFDs or on exchange future and options. Index trading is speculating on stock market indices like the FTSE 100, S&P 500, DAX, IBEX and the CAC. Indices trading is one of the most popular types of day trading around the world. In this guide we explain how to trade indices and what to watch out for.

Follow these steps if you want to trade indices

  1. Open an account with an indices trading platform (IG is good for spread betting, CMC Markets for CFDs and Saxo Markets for futures and options).
  2. Choose how you want to trade indices (spread betting is tax-free profits, and futures and options give you direct market access.
  3. Deposit funds into your brokerage account
  4. Select your indices by searching for their code (FTSE 100 is UKX, S&P500 is US500 and so on)
  5. Execute a trade and speculate on if it will go up or down and buy (go long) or sell (go short).

Different ways to trade indices

If you want to speculate on indices (with leverage), here are the three most popular ways:

Futures contracts

Futures index derivative contracts are popular among traders. These contracts are flexible to incorporate many features including leverage and minimal tracking error. You can trade with direct market access on exchanges like ICE, NYSE, NASDAQ and CBOE. A few indices have ‘mini futures’ (such as mini Dax or mini S&P 500) to cater for traders with a small account. Bear in mind futures (trading through futures brokers) are a professional trading product and only available to clients that have sufficient experience and funds. For traders that do not qualify for a professional trading account liquidity issues are basically moot as traders that do not qualify as professional should not really be trading in the volumes and size that would require additional margin.

Spread betting

Place bets on a £ per point basis as to whether you think the price will move up or down. There is no capital gains tax on profits as trades are structured as bets. The costs to spread betting are the spreads to open and close positions. Most brokers offer competitive pricing on equity indices. For example here with IG, spreads on the FTSE are 1 point, 2.4 on the Dow and 0.6 on the S&P.

CFDs (Contracts for Difference)

You speculate on the opening and closing price of your chosen equity index. This is a form of leveraged trading. CFDs are popular for index trading outside of the UK where financial spread betting is not available.

Industry experts told us

"Index trading provides an excellent way to speculate or hedge on the overall performance of the largest listed companies within a regional economy like the FTSE for the UK or the S&P500 in the US. Another particularly useful aspect is being able to trade one indices' performance against another which can protect you from dramatic overall market moves."

Cost of trading indices

There are two types of spreads on index trading. Fixed and variable.

Fixed means that the difference between the buy and sell price will always be the same. For example, the spreads on Wall Street at always 1 point, the DAX is 1 point and the S&P is 3 points.

Variable spreads mean that the difference between the buy and sell price will change depending on how liquid and volatile the market is. For example, around non-farm payrolls, the market will be more volatile and the best bid offer prices will not have as much liquidity. Therefore, the prices will be slightly further apart.

For example here with IG, spreads on the FTSE are 1 point, 2.4 on the Dow and 0.6 on the S&P.

It’s a bit, swings and roundabouts really. You know where you are with fixed spreads, but with variable, during normal market trading you can get tighter prices, but they widen as the underlying market widens.

Most brokers offer competitive pricing on Index trading. But if you want to compare the most up to date pricing, go to our  index broker comparison tables to compare spreads.

Spread betting and CFD trading on the major indices is risky.

Leveraged index trading

A quick note about the above trading methods. These vehicles can be risky because they have embedded leverage. This means that you can lose capital far more than anticipated on a ‘bad’ day – a session where prices move sharply against your positions. In other words, the trading account has to have sufficient capital buffer to withstand these fluctuations.

The second point concerns the spread between the buy and sell prices. When a market becomes extremely volatile, spreads will increase (sometimes dramatically) as brokers, market makers and large investors all want to dump large positions simultaneously. Prices may leap or plunge in seconds.

For example, around US non-farm payrolls, the market will be more volatile and the best bid offer prices will not have as much liquidity. Therefore, the prices will be further apart.

Volatile pricing may hit the stops (always have them when opening positions) and then prices bounce back near the starting points.

Lastly, if at any point you find that these leverage trading is not working and is depleting your capital at a high rate, switch to investing as leverage is much lower. There are many equity-based ETFs that you can buy and hold in your portfolio. This provides an equivalent exposure (since both instruments are based on the same underlying equity index) but with easier-to-manage portfolio risk.

Second only to forex trading, indices offer good liquidity, a decent intra-day range and pretty much 24 hour news flow.

SPDR iShares 500 (SPY), for example, is the largest ETF in the world that tracks the S&P 500 index. You can buy this ETF for your stock portfolio.

Why are indices so popular in trading?

Major indices are also some of the most liquid tradable assets out there so no matter how big a trader you are your orders should always get filled.

As index trading is heavily influenced by a combination of the individual constituents of an index, overall economic data and self-fulfilling technical analysis there is a never ending supply of news, events and signals to trade from.

Traders analyse and develop judgements on major stock market indices like the FTSE 100, S&P 500, DAX, or the Nikkei 225. Then, active bets are placed on the direction of the index. But who trades equity indices? Institutional portfolio managers, traders and investors all trade equity indices in major financial markets. Liquidity is excellent; exposure easily adjustable. Leverage is attainable via futures. Their trading time frames may range from intraday to multi-month. In sum, index trading is no more sophisticated than Forex trading as long as you understand the basics and master the rhythm of the market.

The rest of this guide helps you to understand these indices, what they are and how to trade them.

How does trading an index work?

An equity index is basically an artificial financial construct whose value is derived from a fixed number of stock prices. Of course, the larger the index, the more constituents it has. Investors often use these indices to describe, measure and compare the aggregate performances of a group of selected stocks.

For example, there is a stock index for the large-cap (called blue chips); and another for the mid-cap. Often, there is another for the small-cap stocks – stocks whose market capitalisations are among the smallest in a market.

A stock index, unlike a stock security, can’t be traded directly. Instead, you have to purchase a security or derivative that is based on the index, such as an ETF or index fund or futures.

Another point worth noting is that a stock index’s minute-to-minute value fluctuation relies on individual stock prices. Depending on the calculation method, a stock with a higher market capitalisation often influences the index more than a small one.

What makes equity indices popular is due to decent intra-day ranges and pretty much 24 hour news flow. The constant release of economic figures and leading indicators creates sufficient price volatility to trade in most sessions.

Major equity indices are also some of the most liquid tradable assets out there, so no matter how big a trader you are your orders should always get filled.

One of the well-known equity indices is the US S&P 500 Index, arguably the most important equity index in the world. The index encompasses many global stocks such as Apple (AAPL), Microsoft (MSFT) and Exxon (XOM).

Source: Barchart.com

Benefits of trading equity indices

Equity indices are popular trading vehicles. There are a few reasons their popularity:

  1. Equity indices are linked to macro cycles – since stock markets are proxies for the underlying economy. While it is true that the economy and stock market may not move together all the time, they do synchronise. During a recession, companies report losses and lower profits. This dents stock prices. Ergo, stock indices are popular instruments to trade the macro outlook. 
  2. Equity indices provide diversification. Investors can trade equity indices across different countries. And because the underlying economies grow differently, this means their stock markets zig-zag at a different pace. This provides some diversification to a portfolio.
  3. Equity indices do not go bust. Unlike stocks. By and large, an equity index is made up of stronger stocks. Weaker companies are gradually deleted from the constituents list – known as ‘rebalancing’ – to maintain the vitality of the index. Yes an index may drop by two-thirds, but it will not fall to zero.
  4. Key equity indices are liquid. Investment and derivative instruments that based on major equity indices generally have good liquidity and easy to trade.
  5. Equity indices are used to hedge underlying stock exposure. Given the good liquidity portfolio managers used equity indices to hedge (albeit imperfectly) their equity exposure. Trading in most blue-chip indices are active.

Most popular types of indices trading

We’ve covered the best indices to trade in a separate guide, but here we will run through the most popular regions for index trading.

US indices

The US stock market is the largest in the world. The depth of the American capital market is unrivalled due to presence of Wall Street and numerous global-leading major technology companies (eg Apple or Tesla). Trading activities in Wall Street are hectic; liquidity is excellent.  Three favourite US equity indices to trade are: S&P 500, Nasdaq and Dow.

European equity indices

Next on our list of the most popular equity Indies to trade are based in Europe. The continent is home to numerous industrial powerhouses and fashion businesses, many of which are world class, eg LVMH, BMW, and BASF. Because of this, Europe is one of the best places to invest and trade. Since not all European financial markets offer similar depth of liquidity, traders look to larger ones, such as DAX and CAC.

Asia Equity Indices

Asia includes a huge swath of the world’s population. Many Asian countries are still developing. This means that the continent houses a large number of fast-growing companies. This excites many investors since returns are potentially massive. As an example, look no further than VinFast – a 6-year old Vietnamese EV maker that, after its 2023 IPO, was briefly worth 3x Volkswagen’s market cap.

Apart from Japan and HK, there are a few Asian indices that foreign investors preferred to trade, including India’s Sensex Index, Singapore’s Straits Times Index Index, Korea’s KOSPI Index, and the Australia’s S&P/ASX200 Index.  Many of these indices are heavily skewed toward certain sectors. For example, the Aussie index contains plenty of mining and natural resource stocks due to the richness of natural minerals in the country.

What moves index prices?

Knowing these indices is only the first step towards profitable trading. Calculations aside, the most important things to know about these stock indices are:

  1. Index Methodology and Constituents Makeup. How are the indices calculated? Some are market-weighted; some are price-weighted (eg Dow). Within the constituent list, what companies are the largest? One general rule of thumb is this: The bigger the company, the more influence it will have on the index. This influence is especially large if the index has less than 50 components.
  2. Sector Representation. Some indices are heavily skewed towards certain sectors. This means that the rise and fall of that particular industry may result in the movement of the aggregate index.
  3. Index Historical Movements. Find out what had happened in the past. In Japan, for example, earthquakes (’95) and tsunamis can have large – but temporarily – impact on the stock market. In the US, prices can collapse 20% in a day (’87) or plunged 9% intraday (2010). When an equity index suffered from a collapse of an asset bubble, chances are prices will drop further.
  4. Macro Factors – such as tariffs, interest rates, unemployment, inflation can all impact the stock markets one way or another.
  5. Technical Trends – occasionally an index can be influenced by technical trends. For instance, when an index surged past 3,000 to record highs may lead to more momentum buying thus creating further demand. Major round number levels can sometimes act as support or resistance to a trend. A quick glance at Nasdaq Composite below shows major support at 10,000.

Where can you trade indices?

Aside from market makers that are required to create some minimum liquidity, there are no set rules for OTC brokers to provide liquidity. Liquidity is based on the underlying market as some brokers will need to hedge client index positions. If the underlying market has thin liquidity, so will your broker.

However, some brokers also limit liquidity based on position size or overall exposure. Retail trading accounts will get less OTC liquidity that professional trading accounts. Also, there will be position limits based on overall exposure. If a trading account only has one position it will be heavily exposed to that market, but if there is a diverse portfolio of positions, position limits will be higher as exposure is reduced.

To get the best liquidity for index trading you may be better of dealing through a direct market access broker that offers on-exchange futures and options execution. This way you can see the order book and get a live overview of liquidity in the market place.

However, futures (trading through futures brokers) are a professional trading product and only available to clients that have sufficient experience and funds. For traders that do not qualify for a professional trading account liquidity issues are basically moot as traders that do not qualify as professional should not really be trading in the volumes and size that would require additional margin.

A great book to get more information on this is Flash Crash, by Liam Vaughan, which tells the story of Navinder Sarao AKA the Hound of Hounslow, a futures trader on the e-mini S&P. It talks in-depth about how liquidity in the indices market work

Index Trading Platform FAQ:

Indices are listed on futures exchanges like the ICE (International Continental Exchange) for FTSE futures and the CME (Chicago Mercantile Exchange) for E-mini S&P 500 futures. These future provide the basis, or underlying asset on which Index brokers enable their clients to trade indices.

The actual on-exchange futures contracts are mainly for professional and institutional traders as the minimum contract size is often quite high. For example, the FTSE future contract is valued at £10 x the index value. So at the time of writing (4/11/21) where the FTSE Index is valued at 7200, a single FTSE future is worth £72,000.

Yes, you can make money trading indices, but Index trading is a high risk. To successfully make money trading indices you will either have to invest in indices in the long term or call the market right in the short-term. It is worth keeping in mind that only around 25% of non-professional traders make money. but some are easier to trade than others. 

Yes, as a financial instrument in the UK index trading is regulated by the FCA.

Index brokers make money through fees and financing charges. Index broker costs can be broken down depending on how an index is traded.

The different types of index broker make money in these ways

    • Futures index brokers – commission charge on a per lot basis
    • Options index brokers – commission charged on a per lot basis
    • CFD index brokers – the bid/offer spread is widened and overnight interest is charged on positions
    • Spread Betting index brokers- the bid/offer spread is widened and overnight interest is charged on positions
    • ETF index brokers – commission charge on buys and sells, plus an account maintenance charge

Here is a list of the most popular stock markets to trade with an index broker. You can read more about each specific index, the pros and cons of trading and what economic factors move the market by either clicking on the below index links or reading our guide on the top ten stock market indices for trading and why.

The main things to consider when choosing an index broker are:

  1. Are they right for your level of experience?
  2. How many indices do they offer?
  3. What are the commissions and fees?
  4. How can you trade indices?
  5. What sort of added value does the broker offer?
  6. What trading platforms and mobile apps do they have?

In this guide to the best brokers for trading indices we will go through each point, highlight which broker is best for each point so you can make the best choice for the specific type of index trading you do.

By trading an index rather than the individual shares you can buy and sell the entire market in one go.

This article contains affiliate links which may earn us some form of income if you go on to open an account. However, if you would rather visit the index brokers via a non-affiliate link, you can view their indices trading pages directly here:

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