How To Trade Indices
Indices: the trading process
Decide the index, the direction and the size, then define your exit before entering. Index CFDs are quoted in points; one point of movement on a one-contract position equals one unit of the quote currency. Because index products move on macro news, most professional index traders build their calendar around central-bank meetings, inflation prints and employment releases rather than company reporting.
Index volatility
Volatility clusters. Quiet drift is punctuated by sharp expansion around scheduled events and unscheduled shocks. Position sizing should be derived from current average true range, not from a fixed point stop that ignores the prevailing regime.
A disciplined index trade, step by step
- 01
Read the calendar
Identify scheduled releases within your intended holding period and decide whether to hold through them.
- 02
Measure the range
Take the 14-period average true range on your trading timeframe and set the stop outside normal noise.
- 03
Size from the stop
Position size equals risk budget divided by stop distance — never the other way round.
- 04
Manage, do not micromanage
Move to break-even only once the trade has covered its own risk; otherwise leave the plan alone.
Indices trading: a worked example
| Stage | Detail | Value |
|---|---|---|
| Direction | Short US Tech 100 ahead of CPI | — |
| Entry | 2 contracts at | 17 980.0 |
| Stop | Above prior swing high | 18 062.0 |
| Risk | 82 points × 2 contracts | $164.00 |
| Exit | Target reached at | 17 816.0 |
| Result | 164 points × 2 contracts | $328.00 |
A two-to-one reward-to-risk plan. Outcomes are not typical and losses are equally possible.
Practise on a funded demo first
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74–89% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing your money.