For the majority of modern people, the working day starts with reading news while drinking a cup of coffee. And it absolutely doesn’t matter which source of information is used: newspaper, TV news, Internet or anything else which makes an emphasis on binary or stock indexes which are used in effective trading strategies. All this is done not to support an image of a separate newspaper but to let people know that nowadays, trading on stock exchange is an extremely attractive sphere not only for investing but also for additional income due to speculative activity.
Nevertheless, there is an opinion in Former Soviet Republics that stock indexes are some sort of abstraction-electronic instrument which was created especially for manipulations of a real sector. Whereas in real, such opinions and statements have no relevance to reality.
Speaking about stock indexes in simple words without using special terminology and glossary, then index was created and developed for depicting the price of a stock market or a certain segment i.e is an estimated indicator which is calculated due to stock or a certain company.
In such a way, stock index is a simple figure and it cannot be traded, that’s why special financial instruments such as futures and index were made for speculation activities. Exactly these assets are carefully controlled by financial experts and stock traders from all over the world, because only with their help it is possible to:
- buy “the whole market” without creating holdings of shares/share portfolio;
- insure risks when buying shares in a particular industry with an aim of receiving dividends;
- simply get profits from speculation activity;
Unfortunately, one needs big funds (money) in order to trade futures, for example, to make deals with E-Mini or S&P 500, a trader should add minimum $4600 fund to an account – it is a marginal requirement of a stock exchange.
Concluding all the above-mentioned information, one should not forget about stock indexes peculiarities and advantages which are appropriate and suitable only for options on stock indexes. First of all, it is about an opening opportunity for a trader to trade with the help of multiple stock market instruments which let receive a pretty high income.
Of course, in order to reach such results, one should have a serious approach to trading which should be perceived like work. Other peculiarities include: risk fixation, high profitability which is known in advance etc.