S&P trading platforms let you speculate on the Standard & Poor’s 500 stock market index (ticker: SPX), one of the oldest equity benchmarks. We’ve compiled a list of some of the best brokers for trading the S&P 500 (SPX) that are authorised and regulated by the FCA. 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 S&P.
Compare S&P 500 Trading Platforms
How do you trade the S&P 500 index?
You cannot buy the actual index, you have to trade a derivatives product based on it’s price 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
Why is the S&P so popular for trading?
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 price?
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.
S&P 500 technical trading 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.
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 S&P indices for traders
You can read about the major indices in our guide to the best indices for index trading.
- Dow Jones Industrials Average (US 30)
- Nasdaq (Composite and Nasdaq 100)
- Dow Jones Industrials (DJIA)
- UK FTSE 100 (FTSE 100)
- CAC 40 (France 40)
- DAX (Germany 30)
- European Stocks to Buy Now
- Japan 225 (Nikkei 225)
- Hong Kong (Hang Seng Index)
S&P trading FAQ:
How is the S&P calculated?
The Index takes the largest 505 stocks in the US exchanges and calculates the index prices based on stock price movements minute by minute.
What is the biggest S&P ETF?
The biggest ETF based on the S&P 500 Index is the S&P500 ETF (ticker: SPY).
When was the S&P founded?
Formed in 1957, the index is now the most popular stock market barometers in the world.