Tools, platforms and products, here are the best brokers with the lowest spreads and also the most advantageous conditions for trading online on stock market indices.
Derivative products such as CFDs (contracts for difference), futures and binary options (for professional clients only) can be used to trade on stock indices, a good index broker must therefore offer the chance of trading online on a good variety of financial instruments. Another fundamental point are the trading conditions, including low spreads and commissions applied on each trade, and finally the tools for online trading made available by the broker such as: trading platform, analysis tools, indicators, copy trading services, social trading and automatic trading.
Before seeing the ranking of the top brokers for trading on indices, let’s analyze what stock indices are, why they’re one of the most traded assets and what are the benefits of trading on these financial products.
What are indices and why are they a good product to invest in
Stock market indices are baskets of shares which in most cases contain a number of companies with the largest market capitalization.
The Dow Jones, the oldest stock market index, is made up of the 30 most important companies in the USA, and the calculation is done by adding the capitalization of the companies and dividing them with the Dow divisor.
The most important index at the moment is the S & P500 (Standard & Poor 500) weighted index which groups 80% of the total capitalization of the US market.
It is made up of 500 listed companies starting from 8 billion capitalization with over 50% of the shares available on the market and the index share is calculated through the weighting of the market cap.
The difference between the 2 indices is the weighting. Assuming that only Apple falls 10% and all other stocks remain unchanged, the S & P500 will follow the company’s fall, while for the Dow Jones , a fall by Apple will mean a higher fall, as long as Apple’s share is the third in order of magnitude and weight of the index.
Why trade indices
The use of indices is varied and depends tons on the trading strategy that’s used, we list here the various types of trading that can be used:
Hedging or hedging : one of the main functions of index trading is the defense of your equity portfolio. Example: we have a portfolio of Italian stocks, but there are elections that could upset the volatility of the Italian market. The use of CFDs or futures in the Short position of the FTSE Mib, acts as insurance for the value of our basket of shares, being the thermometer of the most important slice of Italian listed companies, a result not appreciated by the financial markets would lead to the hedging position in gains as our shares lose value, thus maintaining the entire value of the assets invested.
Scalping : one of the best known forms of online trading speculation that takes advantage of volatility and high trading volume, which finds highly traded indices such as the DAX (Germany), one of the favored assets for these very short-term trades.
Cyclical trading : Since the economy is formed by economic cycles (Wikipedia), through the world fundamental analysis it’s possible to implement medium / long-term operations, to exploit, for instance , periods of expansion or recession, which greatly affect the indices.
The best brokers to trade on the most competitive indices
Among all the brokers reviewed, these are the best regulated brokers that provide the possibility to trade indices online at the most advantageous conditions, with low spreads, demo accounts and platforms optimized for all the most investment strategies on the stock market indices.
XTB is a world-renowned Polish CFD broker and offers one of the best offers for combination low spreads and variety for online trading of CFDs on indices.
It offers both CFD futures and CFD indices (slightly more expensive than the former), with the main feature of not applying overnight costs (for FTSE, DAX indices, etc.) and other commissions for those who operate on futures indices.
CySEC regulated for Italian clients, being an ESMA broker, it differentiates the leverage on indices for the retail trader up to 1:20 and for the professional trader up to 1: 200.
There are two platforms available, the classic MetaTrader 4 and xStation, the broker’s proprietary platform, as well as one of the best trading platforms for immediacy and ease of use.
XTB is one of the best CFD trading brokers we’ve reviewed over the years, offering transparency, security and optimal trading conditions, along with training and a good level of customer support.
IC Markets is a globally recognized Australian broker, ASIC regulated and with the ability to trade with high leverage up to 1: 500.
The index asset pool includes 23 CFD indices, the highest number of tradable indices among the chosen brokers, with the most competitive conditions ever, low spreads on the standard account and 0 pips spreads (for example on FTSE100) on the ECN account (the broker’s most popular account type).
It is considered among the best brokers for forex trading globally, but equally competitive when it comes to trading indices and commodities. A great choice for traders of all experience levels and for automated trading.
FP Markets is a well-known and rapidly expanding ECN broker, providing various trading platforms and very favorable conditions for trading indices.
One of the elements that make it one of the top brokers for trading indices is the IRESS trading platform, which integrates macro news directly into the platform (one of the most important strategies for trading indices) and makes fundamental analysis way more simple.
Leading broker in social trading and copy trading, eToro is the number one broker for trading indices using their systems.
eToro is a suitable choice for both the private trader and the professional trader, since it allows you to automatically copy and replicate the strategies of other investors who are already generating profits on eToro. This is essentially the broker’s strong point.
The broker has a good online reputation and offers one of the most intuitive platforms to use, as well as good customer support.
As a CySEC regulated ESMA broker, eToro respects the maximum leverage on index CFDs up to 1:20 for non-professional clients.
Among the most popular CFD brokers with a high media presence, Plus500 offers a very wide range of indices on which to trade online.
In addition to the classic CFDs on futures and cash indices, Plus500 offers innovative indices on the foremost popular products, such as the cannabis giants index.
Plus500 offers a free demo account and provides a maintenance margin on CFD indices, being a CySEC broker, of 50 of the position value.
It offers a really intuitive and immediate platform to use, as well as very efficient chat and email support. Finally, it’s a broker listed on the London stock market , a condition that therefore guarantees a high level of security and protection for the investor.
ActivTrades is a very long-lived broker on the market and known as one of the most reliable, it has various European regulations and also has physical offices on the Italian territory .
Being an ESMA broker, the distinction is active between a private client, with a maximum leverage of 1:20 and a professional client, with a maximum leverage of 1: 400. All platforms can also be tested for free through demo accounts (one for each platform).
The indices trading offered by ActivTrades has spreads starting from 0.5 pips on the S & P500 and includes CFD indices, Cash indices and financial indices, useful for diversifying your investment strategies.
Admiral Markets is a highly reputed broker that offers the ability to trade on 19 Cash and 7 Future indices, including the DAX30, US Dollar Index, NQ100, SP500 and FTSE100 to name the most important. The maximum leverage for retail investors is 1:20, while for professionals it is 1: 500.
Admiral Markets offers low spreads starting from 0.8 pips on the DAX and 0.4 pips on the SP500 (0.1 when trading on the ECN Admiral Prime account), as well as the ability to trade in mini lots. Additionally, the high-level training program and professional customer support make it one of the best brokers to trade indices CFDs.
Admiral Markets offers a really competitive general offer compared to many online brokers and different markets on which to operate, in addition, the set of add-ons offered on the MetaTrader, improve the classic experience of the platform and make it a preferable choice for those looking for a broker MetaTrader.
Axitrader is an NDD broker that offers the possibility of trading CFDs on futures indices with competitive spreads and margins ranging from 1%.
Trading conditions and no dealing desk execution favor various strategies such as scalping, while the MT4 trading platform includes many useful tools for technical analysis, objects and indicators such as moving averages and Bollinger bands.
The maximum leverage on indices for retail clients is 1:20, while for professional clients it’s 1: 100 and therefore the minimum tradable size is 0.01 lots.
Axitrader is a good broker where you can trade indices both for the low costs and for the good level of assistance, as well as for the great reputation in the sector.
Avatrade is one of the best CFD brokers with market maker execution and global regulation from major financial hubs such as United Kingdom and Japan.
It offers the possibility of trading online on a good number of indices through contracts for difference (CFDs) and given the type of market maker execution, it becomes a good broker for trading on indices given the smaller number of requotes.
With Avatrade you have the possibility to choose under which regulation to open the account and if you want to operate with the maximum leverage at 1: 400, just choose the no ESMA regulator.
For the validity of the offer and the quality of the services, Avatrade is the first recommended choice for those looking for a broker market maker to invest on indices.
Markets.com is a valid broker market maker, with an excellent trading platform, developed by Playtech, a leading company in the field of online platforms.
It is possible to test the platform in demo trading mode through a free and unlimited demo account, while the index park offered by Markets.com has 35 CFD indices divided between cash and futures indices, a really high number which makes it the most provided in this ranking. of the best index brokers.