How to trade the S&P 500
Curious about the S&P 500 stock index ? Learn how to trade S&P 500 ,including what S&P 500 is and how to make trade?
What is the S&P 500?
The S&P 500 is a stock index that includes 500 basic companies listed on US stock exchanges.
The S&P 500 index is listed on the Wall Street stock exchange, which is the most important world stock exchange and it includes the 500 most common traded companies in the American market. NYSE
This is the standard index worldwide and that is why it is the most followed by investors, since it is supposed that this stock index has the highest world representation, from a sector and market outlook , in terms of its equity.
5 facts about SP500
–It was created in 1954.
–Of the 500 first SP500 companies, only 86 were still included in the index on their 50th anniversary.
–When the SP500 was created, the shares belonged only to 3 sectors of activity: industry, public services and rail.
–The origins of the SP500:
–Its origin dates from 1923.It was not until March 4, 1957 that this index was expanded to the 500 most represented companies and they gave it the name it is known as today.
What companies are in the S&P 500?
-Apple.
-Amazon.
-Google.
– Microsoft.
-Facebook.
-Berkshire Hathaway.
-JPMorgan.
– Exxon.
-Johnson & Johnson.
-Bank of America .
Each company has to meet the following requirements to be considered for entering and trading on the S&P 500 index
The market capitalisation must be equal to or larger than 4000 million dollars.
Relation between market capitalisation and the annual amount negotiated in dollars must be larger than 1.
The volume of shares traded per month must be at least 250,000 shares per month in the 6 months prior to the quotation date.
SP500 long-term analysis:
The SP500 started in Oct with a BEARISH leaning that started in mid-September, with decreasing highs and lows
If we look back and notice the evolution of the index since spring 2008, in the midst of the crisis, we see how the SP500 collects a decade of growth. This shows and reflects that the stimulus policies by the Federal Reserve and its injections of liquidity in the economy to promote consumption have worked.
Why trade the SP500?
Advantages of trading SP500:
–The US stock market opens at a specific time and closes at a specific time.
–You can benefit from the moves in the opening of the market, around the opening gaps and market ranges.
–You can benefit from a competitive spread to reach better outcomes in your positions in the S & P500.
SP500 trading gives you access to a financial product related to the economy and news of US companies, allowing stock market enthusiasts to simply and fastly intervene in the US market index.
The disadvantages of trading SP500:
–Gaps can be a damage for some traders and real chances for others.
–Leverage. This power to speculate with big quantities is double-edged, so leverage can be a disadvantage when used incorrectly.
–Trading the SP500 CFDs:
How can we scalp using CFDs on the SP500 index?
Select a short time unit (1 – 5 minutes)
Wait for the price to reach a striking level (support.. resistance,…pivot point …)
Open a position to try to get some points of increase or decrease.
Close this position in profit or loss fastly.
This approach requires discipline, responsiveness and experience. It is significant to pay attention to the SP500 trading schedule, for example:
The opening of the New York Stock Exchange.
The dates on which the economic data of the US are published.
Time unit: 5 min
Indicators:
Heiken Ashi
2 exponential moving averages ( 8 & 50 times )
Schedule: Based on the US session schedule. From 15:30 , 16:30, time of the trading platform.
Purchase position: Near a blue Heiken Ashi candle introduced by a red Heiken Ashi candle, when the moving average 8 is over the 50 time moving average.Read more
Selling position: Near a red Heiken Ashi candle introduced by a blue Heiken Ashi candle, when Moving Average 8 is under the 50-time moving average.
Stop Loss position to protect your capital:
For a long position, the stop loss will be set under the last red Heiken Ashi.
For a short position, the stop loss will be set on the last blue of Heiken Ashi
Take Profit Position: Whether a long or short position, Take Profit is the same space from Stop Loss, a ratio of 1 to 1. Read more
Swing trading the S&P 500 index
Swing trading positions open and close the next day or stay open until many weeks later.This trading type is for those who have another job or who want to trade with little time.
The major idea is to find good trading chances in quite big time units such as H4, with daily and weekly charts.The SP 500 CFD can be a tool of choice to add to your portfolio, either to vary or participate in the moves of this basic stock index.
What are the finest times to trade the SP500 CFD?
From 4:30 p.m. to 11 p.m. ( MetaTrader time )
When the US session starts , Asian markets have already been closed for about 2 hours, but in Europe it is still daylight and European trading sessions are not yet closed. The most significant volumes are exchanged at that time!
When the activity in the US markets ends, there is a drop around 22:00, until the opening of the Asian markets.
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