Index Futures: How to Trade Stock Index Futures

How to trade index futures

1. Know the difference between betting on spreads, CFDs and futures

You can use spread bets or CFDs to speculate on the price of an underlying futures market. All this means that your future positions are opened and closed directly in our platform. This way, you will never need to take delivery of the underlying options, but instead will be able to trade with leverage whether index prices rise or fall.

You can also use spread bets and CFDs to trade cash indices, which is called spot trading. This is best suited for day trading.

Learn more about spot trading

Learn more about the difference between Futures and CFDs

2. Understanding the leverage effect

Bets on spreads and CFDs are leveraged, which means you can speculate on the price of index futures without needing to buy or sell physical assets. With leveraged trades, you will use a deposit (called a margin) to open a larger position and calculate the profit and loss based on the total position size. This means that the losses or profits incurred can be much greater than the initial deposit.

3. Choose your index

There are different futures markets that can be traded with both spread bets and CFDs. We offer all of the major global indices for futures trading including FTSE 100, Wall Street, Germany 30 and above. If you choose to trade futures with spread bets or CFDs, that’s over 80 global indices. We also offer competitive spreads – for example, you can trade the FTSE 100 for as little as 1 point.

Some indices – like Germany 30 for example – experience higher volatility than others, and might be better suited for short-term traders, often using spot trading.

4. Decide if you want to be long or short

Unlike owning a futures contract outright, trading futures contracts with spread bets or CFDs means that you can be long or short on an index price. Being long means that you are speculating on the value of a rising future, and being short means that you are speculating on its falling value. If you think the underlying price of an index is going to rise, you will open a long position.

If you think the price of the underlying index will go down, you will open a short position.

5. Place your first trade and start trading

To place your first trade, go to our trading platform and select an index. Then select “Futures” from the drop-down menu next to the index name tab on the price chart, decide whether you want to buy or sell the index and choose your position size.

Remember to set your stops and limits before placing your trade.

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