What Is CFD Trading?

A Contract for Difference (CFD) is an agreement made between the buyer and the seller of a specified asset. This agreement states that the seller will pay the buyer the difference in price between the asset’s value at the time the agreement was made and the asset’s value at present. CFD trading is one of the most popular options for traders because you’re trading on price movements of an asset, without actually having to buy it. Online CFD services, such as those provided by Pipstarkhub, make it possible to trade on markets around the world.

About Equity Indices Trading

Equity indices, or stock indices as they are also commonly known, are actual stock market indexes, which measure the value of a specific section of a stock market. They are calculated based on a weighted average of the prices of selected stocks, which belong to the actual category that they represent. Stock indices can represent a specific stock market such as NASDAQ, or they can represent a specific set of the largest companies of a nation such as the American S&P 500, the British FTSE 100, or the Japanese Nikkei 225. The purpose of the indices is to show the general direction of a specific stock market or of the general economy of a nation. However, since stock indices are composed of a basket of companies they can be very much affected by a big move of a specific company or by a big move of a specific sector of trade.

Some of the most popular Indices

S&P 500 (US500):  The S&P500 (US500) stock market index was introduced by the American financial services company Standard & Poor’s Financial Services LLC in 1957. It is a leading indicator of US equities, and as one of the most frequently used benchmarks for the US stock market on the whole, it covers about 75% of the American equity market by capitalization.

ASX200 (Australia200):     The ASX 200 (AUS200) index is a market-capitalization weighted stock market index of stocks listed on the Australian Securities Exchange, which belongs to the world’s top 15 exchange groups with an average daily turnover of $4.685 billion. The index exclusively includes stocks listed on the Australian Stock Exchange.

Nikkei 225 (JP225):  The Nikkei 225 (JP225), commonly known as Nikkei, is a stock index of the Tokyo Stock Exchange, the world’s third largest stock exchange with a market capitalization of US$4.09 trillion.

HSI (HK50): The HIS (HK50), Hang Seng Index, is a market capitalization-weighted stock market index that has been used since 1969 to record the daily changes of the 50 largest companies present at Asia’s second (and the world’s sixth) largest stock exchange, the Hong Kong Stock Market (HKEx).

FTSE 100 (UK100):   The FTSE 100 (UK100) stock index stands for Financial Times Stock Exchange 100 Index, encompassing the 100 companies with the highest market capitalization listed on the London Stock Exchange.

NASDAQ 100 (US100):  The main NASDAQ index is the NASDAQ Composite, with its subset NASDAQ 100 (US100) that consists of 107 equity securities issued by the 107 most powerful non-financial companies listed on the NASDAQ Stock Exchange.

DJIA (US30): DJIA (US30)  The second oldest stock market index in the United States after the Dow Jones Transportation Average, shows the performance of 30 major American companies during a standard trading session in the stock market. It is calculated by the DJIA Divisor by dividing the total sum of all prices of all 30 stocks that it represents.

DAX (GER30): DAX (GER30)  which stands for Deutscher Aktienindex, is the principal German stock market index representative of the 30 major companies that trade on the Frankfurt Stock Exchange. It is considered to be a blue chip index in terms of quality and profitability.

CAC 40 (FRA40)  The French benchmark stock market index CAC 40 (FRA40) stands for Cotation Assistée en Continu, and it represents the top 40 values of the 100 highest market-capitalization company stocks traded on the French securities market Euronext Paris, the second largest exchange in Europe.

Risk Warning: Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. Please read our Risk Warning Disclosure Risk Disclosure .