Best Indices Brokers
Richard Montana | August 4, 2022
Indices trading is a popular choice for active investors who would like to trade some of the biggest companies grouped together rather than individual stocks. Usually, each stock is given a weighted average in the index in relation to their market capitalisation which determines their level of influence over the index price. The stock index price is calculated using the live prices of the enlisted stocks, and any fluctuations affect the index price according to the weighting.
An index price usually reflects the average performance of individual stocks that make up that index. When the price of an index goes up, it means that most of its constituent stocks have increased in value compared to a minority that has dragged it lower. The variety of indices means that there is ample opportunity to look for trades in different categories. Indices trading can be suitable for scalping, day trading and swing trading.
Because there is no underlying physical asset to exchange when trading indices, most indices trading is done with financial derivatives like CFDs. When you trade indices CFDs, you can speculate on the price the price of an index falling or rising without needing to take ownership of the underlying asset. This makes indices trading accessible to anyone with an internet connection. You just need an account with an indices broker.
However, it can seem like a daunting task to find a suitable broker with so many brokers offering indices trading. That is why we have compiled this indices trading guide, to help you discover some of the best brokers for trading indices online.
Top 10 Indices Brokers
Here you will find our best indices brokers, based on thousands of hours of extensive research, testing and analysis across hundreds of brokers. Upon conclusion of each of our broker reviews, we have assigned each broker with a rating.
Some of the most important factors that contribute towards a good broker for trading indices online have been considered including things such as the available indices, other financial instruments, platforms, apps, tools, spreads, execution, liquidity, fees, education, funding options, regulation, customer service and more.
Each of our best brokers for trading indices have undergone and passed our stringent broker reviews with flying colours, based on what we consider to be amongst the most important considerations when choosing a indices broker for trading online. These brokers are well-established within the online trading industry, providing top indices trading conditions to traders and investors of all experience levels.
Having the best indices brokers according to our findings listed in one place, can help you save time when looking for the best indices broker for your own individual needs.
ADGM FRSA, ASIC, BVIFSC, CBI, FFAJ, FSCA, IIROC, JFSA
Min $100 Deposit
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
Min $250 Deposit
AvaTrade offers one of the largest ranges of stock indices of any online broker, covering markets around the globe. You could consider using AvaTrade for online index trading with competitive spreads, leveraged trading and reliably fast execution. There are numerous eBooks and guides on indices trading strategies as well as market analysis videos and regularly updated blog posts. They also offer scheduled weekly webinars conducted by top industry professionals and investors as well as real-time stock market indices in-chart technical analysis updates by the fantastic Trading Central. AvaTrade have everything you need to trade indices CFDs with precision.
IG are one of the best brokers overall, and this is no exception when it comes to trading indices. You can take your position on an impressive selection of over 80 indices with more index trading hours than their nearest competitors. This means you can find more opportunities and open or close positions when other traders cannot. You can even hedge your weekday positions with a weekend one on the same market. You can act on breaking news, macroeconomic events and earnings reports as they happen.
Pepperstone are one of the most established online brokers having been around since 2010 and are well regulated in multiple jurisdictions. With them, you can trade on the movement of major stock market indices around the world with no commission, low spreads and fast execution. You can also stay up to date with market news, analysis and insights on indices from the brokers inhouse team of expert analysts. It’s quick and easy to get started. You can apply in minutes with a simple application process and start trading indices right away.
IC Markets has a large range of indices from around the world to choose from, including the Australian S&P 200 Index, UK FTSE 100 Index, US E-mini S&P 500 and US DJIA Index. The world’s most popular indices are available on all IC Markets trading platforms, including the user-friendly MetaTrader platforms and the powerful cTrader. You can gain exposure to the basket of instruments making up the index in just one trade. The broker offers competitive spreads across all of their cash indices, including the E-mini S&P 500 Index from 0.4 points, the FTSE 100 Index from 1 point, Xetra DAX Index from 1 point and S&P 200 Index from 1 point. In addition to equity indices, IC Markets also offers Futures Indices: ICE Dollar Index and VIX Index.
At XM, you can trade over 20 stock indices (equity indices) with them on the popular and user-friendly MT4 and MT5 platforms with no commissions and no hidden fees. XM offer cash and futures index CFDs. The cash index CFDs are undated transactions that aim to replicate the cash price of the underlying index, and so they are adjusted for interest and dividends. Index futures CFDs expire on specific future dates and are cash-settled on the expiry date. You can buy and sell a good selection of indices with lots of handy trading tools to assist with your market analysis and managing your positions. They have intuitive yet powerful platforms for desktop and mobile devices.
XTB offer superior execution on a reliable, award-winning platform, being one of the largest stock exchange-listed Forex and CFD brokers in the world – dedicated to helping you at every stage of your trading journey.
Axi is an award winning, regulated online broker created by traders for traders. They offer tight spreads, low commissions, rapid trade execution speeds and a range of different markets. Advanced platforms and trading tools ensure an excellent trading experience.
FXTRADING.com is a regulated trading brokerage firm that provides traders around the globe with access to trade thousands of financial instruments with competitive trading conditions such as tight spreads, low fees, flexible payment options and easy to use platforms for multiple devices.
Trade Republic Bank GmbH is a German online broker founded in Munich and based in Berlin. As a credit institution, the company offers its customers the opportunity to trade listed securities and cryptocurrencies via a modern and intuitive mobile trading app.
FXOpen were one of the first online brokers and remain one of the most established today. They are a regulated ECN broker offering some of the best possible trading conditions with low spreads, fast trade execution speeds and competitive commissions.
Indices Trading Guide
What are Indices?
Indices are a measurement of the price performance of a group of shares from an exchange. For example, the FTSE 100 tracks the 100 largest companies on the London Stock Exchange. Trading indices enables you to get exposure to an entire economy or sector at once, while only having to open a single position.
There are indices for almost every conceivable sector of the economy and stock market. Many investors are familiar with these indices through index funds and exchange-traded funds whose investment objectives are to track the performance of a particular index. Some of the most widely followed indexes include:
- The FTSE 100: Sometimes called the ‘UK 100,’ this represents the UK’s hundred biggest companies by market capital
- Dow Jones: Often referred to as simply ‘Wall Street’ this index is the price weighted average of 30 of the most significant stocks that are traded on the NASDAQ and New York Stock Exchange (NYSE)
- S&P 500: The value of the Standard & Poor 500 is based on the share prices of 500 leading US-based companies
- The DAX: Referred to as the ‘Germany 30,’ this index is made up of 30 major German companies
- NASDAQ 100: The ‘US Tech 100,’ is a capitalization-weighted index made up of over 100 tech companies in the US
- Nikkei 225: Japan’s biggest price-weighted index is comprised of 225 of the country’s biggest companies
- CAC 40: Simply referred to as the France 40 this comprises 40 of France’s biggest companies by capitalization
- Euro Stoxx 50: This index collects together 50 of the largest European companies’ share value
The three most popular stock indexes for tracking the performance of the U.S. market are the Dow Jones Industrial Average (DJIA), S&P 500 Index and Nasdaq Composite Index.
These well-known Indices are essentially baskets of individual Shares which are often ranked by independent institutions like major banks or specialist companies like Standard & Poor’s, the FTSE Group and Deutsche Börse.
It is worth keeping in mind that major shifts in the fortune of a single big company which is part of a wider index can have a potentially disproportionate impact on its performance.
What Moves the Price of Indices?
Indices price movements and volatility are impacted by factors like political events, major factors which affect companies in a particular sector, economic data such as employment figures and big changes in the foreign exchange (currency) markets.
It is worth bearing in mind that major shifts in the fortune of a single big company which is part of a wider index can disproportionately impact on the overall performance of an index. One leading index is the S&P 500, which reflects the collective value of the top 500 companies listed on US stock exchanges. If the overall value of those companies’ shares rises, the price of the S&P 500 will go up.
Global Indices markets are dominated by what are commonly referred to as “benchmark Indices”. These are the stock indices which have an outsize impact on economies and are generally held as overall indicators of the economic health of a particular country or area.
What is Indices Trading?
Indices trading means that you are taking a position on a stock index – which is measure of the performance of several different companies. Indices trading can be a way to get exposure to an entire sector or economy at once, without having to open positions on lots of different shares.
One of the most popular way to trade indices is via CFDs, also known as Contracts for Difference. These financial instruments allow traders to profit both from rising and failing markets.
CFD index traders would open long (buy) positions, if they think an index will rise or short (sell) positions if they thought that the index will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, a trader could place a buy order on the S&P 500. If the price of the S&P 500 index goes up, when the trader comes to sell, they will earn the difference between the buy and sell price. If the price of the S&P 500 index goes down, the trader pays the difference and makes a loss.
Some choose to take quick intraday trading opportunities, others prefer short-term swing trading methods, while others prefer long-time frames lasting weeks or even months. You should trade indices in a way that meets your own individual trading style and goals.
How does Indices Trading Work?
The most popular way to trade indices is via CFDs (contracts for differences). These financial instruments allow traders to profit from both rising and falling prices without actually owning the underlying asset or stock index in this case.
Traders would open long (buy) positions, if they think an index will rise or short (sell) positions if they thought that the index will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, a trader can place a buy order on the DAX 30. If the price of the index goes up, when the trader comes to sell, they will earn the difference between the buy and sell price. If the price of the index goes down, the trader pays the difference and makes a loss.
What is an Indices Broker?
An indices broker is a firm or an individual who executes orders to buy or sell indices on behalf of the clients and charges them a commission fee. A firm or individual who trades for their own account is called a trader. Indices can be on spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
Why Trade Indices?
Indices trading is a popular product for some traders for a variety of reasons. These include:
- Speculate long or short on rising or falling indices prices
- 24-hour trading
- Way to diversify a trading portfolio
- Trade indices with leveraged positions
Trading indices is a balanced way to trade on the world’s top financial markets without having to analyse the performance of an individual company stock as they offer exposure to an entire industry. Investors do not have to perform thorough research on individual company reports; they only need to take a bullish or bearish position on a stock index, depending on the overall market sentiment.
Trading global indices with an online broker enables traders to go both long and short on price movements in major indices from around the globe including the UK, US, Asia, Australasia and Europe.
Indices traders can benefit from market movement across not just a single sector, but a wide variety of different types of companies, providing ample trading opportunities along with the potential to diversify their portfolio and potentially reduce the overall risk of exposure to extreme volatility.
The price movement of indices can also be smoother as no one individual stock is likely to induce an extreme price spike, although of course anything can happen in trading. This naturally makes index trading less volatile.
That being said, due to the amount of activity that takes place on individual stocks, indices can still offer sufficient volatility for active traders to find trading opportunities according to their own individual trading strategies. This can be especially true for day traders and news-based price action followers since indices often reflect the broad economic effects of both political and economic shifts.
For the longer-term investors, index trading can be an easy way to diversify their portfolio. Instead of investing in just a few stocks and multiplying risk, index-based exchange traded funds (ETFs) can offer exposure to the entire stock market, whilst simultaneously reducing the risk of a single company negatively impacting an entire trading portfolio.
Most brokers will offer leveraged indices trading which can magnify the size of your trades without committing large amounts of capital upfront. For example, leverage of up to 1:20 allows you to start trading indices with as little as $100 whilst being able to manage $2,000 of capital ($100 x 20 = $2,000).
Whilst this can increase potential profit, leveraged trading also greatly increases risk. It is imperative that you have a full understanding of what leverage is and the significant risks involved with trading leveraged positions.
Choosing an Indices Broker
There are various factors worth considering if you are looking for a indices broker to trade online with. In this section, we will cover what we consider to be some of the most important factors that you need to be aware of when choosing a suitable indices broker for your own individual needs.
If you are looking for a broker to trade indices online with, then regulation should really be one of the first things that you look for. Regulation is very important as it can give traders some protection in the case something was to go wrong. Regulated brokers must follow strict rules and procedures that are put in place to protect investors. Without regulation, there may be no help should the worst happen.
There are approximately 5,000 U.S. indexes. The three most widely followed indexes in the U.S. are the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite. The Wilshire 5000 includes all the stocks from the U.S. stock market.
There are approximately 70 times more stock market indices than listed stocks in the world. There are nearly 3.3 million stock market indices around the world, according to research from the Index Industry Association (IIA).
If you have a particular index in mind, you will need to ensure that the broker you are considering has that index available to trade. The more indices there are, the more choice you will have if you wish to branch out in the future. You might want to see what other instruments are available including Forex, Commodities, Cryptocurrency, Stocks, Indices, Options, ETFs, CFDs and Futures.
Brokers will often charge a commission fee for processing your indices trades through their platform. There may also be accounting fees and inactivity fees. It is important to be aware of all the broker fees and compare brokers to make sure they are providing good value. If you are looking to save as much as possible on your trading costs, you can take a look at our best discount brokers.
To trade indices online, you will need an indices trading platform which the indices broker will provide you with. There are various desktop, web and trading apps available, some more user-friendly than others. Each platform will have a choose of trading tools, features and functionalities. If you are already familiar with a specific trading platform, you may wish to check that the broker provides it. Alternatively, you can opt for a popular and user-friendly indices trading platform such as MetaTrader or cTrader. You will find that there are lots of MetaTrader brokers which is one of the most versatile platforms that gives convenient market access for manual and automated trading strategies. If you don’t have the time or skills to trade and want to copy trading signals, you should look for a social trading platform.
In finance, leverage refers to the act of magnifying positions in the indices market through the use of borrowed capital. You have to qualify for a margin account, but when you do, you’re able to use leverage (margin) to get into indices trades. Leveraged products, such as indices CFDs, magnify your potential profit but also your potential loss.
For example, if you had an account balance of $4,000 and leverage of 1:5, you would be able to take a position size of $20,000 ($4,000 x 5 = $20,000).
Whilst this does mean that you can control a position size larger than you would have been able to without leverage, it also means the risk is significantly greater. It is imperative that you have a clear understanding of leverage and how it works before trading with leveraged positions.
The best indices brokers should have a generous selection of educational resources such as trading guides, tutorial videos, webinars, eBooks, quizzes and more. These can help you to learn more about trading indices online and to help familiarise yourself with the brokers products and services. We are a big advocate of brokers who support informed trading. If you are new to trading and need as much guidance as possible, you might want to explore our best brokers for beginners.
Most indices platforms will have an array of built-in trading tools to assist with their daily trading activities and thorough market analysis. However, if you require any additional tools, it may be worth checking that they are provided by the broker. Tools can include economic calendars and earning reports to keep up to date with the latest index news, which can be used as part of a fundamental analysis. Other trading tools may include trade calculators, trading signals, market alerts and more.
Each indices broker will have its own minimum deposit policy so check that you can meet this requirement. You may also need to provide some personal information in order to pass the brokers KYC and AML procedures. The sign-up process can be quicker at some brokers, especially if all of it is conducted online. During the sign-up process it is very important to make sure that you read all of the brokers terms and conditions, only proceeding if you understand and agree with them.
Indices brokers can have a variety of different account funding options in order for traders to make deposits and withdrawals to and from their trading account. You should make sure that the broker has a convenient funding options for you along with the time taken and fees involved. Common broker payment methods can include wire transfer, credit/debit card whereas some brokers will offer online payment methods such as Neteller, PayPal and Skrill.
There are indices brokers located throughout the globe. Some will offer email and telephone support whereas others will also offer live chat support. You want to be able to contact the broker at a time and via a method that suits you. Therefore, it can be important to check where the brokers’ offices are located, what times they are available and how they can be reached. You could test their response time and quality prior to opening an account.
How to Trade Indices Online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade indices. Here is a summary of the key steps:
1. Decide if indices trading is for you
Trading indices online carries an element of risk and can take more time than other forms of investing. You will need to research indices, manage your indices positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading indices online.
2. Educate yourself
Before trading indices, it is imperative to learn as much as possible about investing and stock indices. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online indices brokers that can help you to improve your trading skills and knowledge.
Most indices brokerages will also provide a free demo trading account so that you can practice trading indices online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose an indices broker
In order to trade indices online, you will need a broker account and trading platform to execute your trade positions. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
4. Research indices
If you have made it this far then you may be ready to start trading indices online! The next step is to research the different companies to discover which indices you have an interest in trading. Perhaps there is a particular industry, product or service that is already of interest to you. Many brokers will allow you to filter indices according to various criteria in order to narrow down your search if need be.
Many traders will begin by analysing different companies, studying public information such as finances, earnings and reports from professional analysts. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have an indices trading plan
Some of the most important factors that can help determine your results when trading indices can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell indices
Once you know what indices you want to trade online, you can analyse them to help decide if and when you will place your trades. After placing a indices trade, you will need to keep track of how it performs and manage it according to your indices trading plan. Some investors will keep hold of indices for the long-term, whereas traders may buy and sell stocks on a daily basis.
Trading indices is a balanced way to trade on the world’s top financial markets without having to analyse the performance of an individual company stock. Indices are financial derivatives that are calculated as a weighted average of share prices of the top performing companies listed on the exchange. Indices trading can be an effective way to diversify against risks by investing on a wide-ranging basket of assets instead of a few investments.
Now that you have had a brief overview of what indices are and what to look for when choosing an indices broker, you may be considering opening an online trading account to trade indices online. To do so, you will need to choose a broker, follow the account opening process and you will then be able to start trading indices online through one of their indices trading platforms.
However, it is important to understand the significant risks involved with indices trading, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade indices and use the trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most trading brokers provide unlimited demo accounts free of charge.
Take your time to research brokers and do your own due diligence, the above information is only for educational purposes and not advice. Please feel free to use our broker comparison tool if you need some further inspiration before you get started.