Are index funds safer than individual stocks?
A stock index is an already well-diversified portfolio. Diversification is one of the main pillars of trading stocks. It simply means having a range of various assets to minimize the risks of unexpected price movements of one asset. Therefore, indices are more sustained to unexpected market shocks than individual stocks and thus considered as low-risk investments.
How do I invest in index funds?
Select the index fund or funds you want to trade. If you are a newbie, it’s better to choose well-known and broad market indices at first. Take into consideration an index sector (for example, Nasdaq 100 is a technological index) and its geography (Nikkei 225 - the leading index of Japanese stocks).
What is an index fund?
A stock index is a benchmark, which measures the performance of several stocks. For example, the well-known S&P 500 includes the 500 largest companies listed on stock exchanges in the United States.
What time can you trade indices?
You can trade indices during the main market hours of a chosen index. For the US indices, trading hours start from 15:00 to 0:00 MT time. See a full list of market hours for indices trading.
What is indices trading?
Indices, or indexes, measure the price changes of a particular group of stocks over time. They allow trading the value of many companies as a single product. Stock market indices are also used to track how an industry, economy, or sector performs in general.
Here are some of the world’s major indices:
- Dow Jones (US30) – tracks 30 large, publicly traded US companies
- S&P 500 (US500) – tracks 500 large-cap US companies
- FTSE 100 (UK100) – tracks the 100 largest companies listed on the London Stock Exchange
- Australia 200 (AU200) – tracks the 200 largest companies listed on the Australian Securities Exchange
- Nikkei 225 (JP225) – tracks the 225 largest companies listed on the Tokyo Stock Exchange
As the index is basically a figure that reflects the health of the market or economy, it cannot be bought or sold directly. Thus, you can trade indices via CFDs (Contracts for Difference), ETFs (Exchange-Traded Funds), index funds, index futures, or options.
Nikkei 225 Index
Nikkei 225 Index
What is Nikkei?
The Nikkei is the major and most famous index of Japanese stocks. It consists of the top 225 blue-chip companies traded on the Tokyo Stock Exchange such as Sony, Canon, Toyota, Nissan, and Honda. The term ‘blue-chip’ is used for describing a company that has a large market capitalization, an impeccable reputation, and many years of success. The Nikkei is often compared with the Dow Jones Industrial Average (DJIA) Index in the United States. Check out JP255 (Nikkei 225) live chart!
How is it calculated?
The Nikkei 225 is a price-weighted index. It implies that the index is an average of the share prices of all the companies included. The Nikkei 225 "Stock Average Fact Sheet" says the JP225 index is calculated every 5 seconds while the Tokyo Stock Exchange is open.
Why trade Nikkei 225?
Indexes are one of the safest and low-risk assets in the financial market. Why is that? Well, every index is a well-diversified portfolio itself. If one company of index loses its value, other growing companies will offset the fall and the total index price won’t drop as much as it can and may even rise despite some falling stocks of the index!
How to trade Nikkei Index with FBS?
You can trade contracts for difference on the Nikkei 225. These contracts reflect the JP225 movement. It allows you to trade in both directions. In other words, you can open both buy and sell orders while trading.
Also, you can use leverage. It means that with only a small amount of deposit you can control much bigger financial positions. Always remember that leverage allows you to multiply your account. On the downside, you may lose a considerable part of it if the market goes against your trades.
To get more tips on how to trade Nikkei and other indices, read our article “Nikkei, HangSeng, EuroStoxx: trade new indices!”
What drives the JP225 price?
The Nikkei is driven by earnings reports, news, and new product launches of listed companies. Besides, the Japanese economic factors such as interest rates, monetary policy, and economic indicators can impact the index as they may change the consumer appetite for products and the overall market sentiment.
FBS offers many other indices for trading. Check best indexes to invest in now!
2023-05-03 • Updated