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Why Zimbabwean Traders Are Looking to Indices

Indices trading in Zim and how to start your portfolio

Trading in indices, also known as index trading or the market index is by far one of the best ways to gauge markets and sectors of the economy. It’s also a great way to expand your financial portfolio. The proliferation of online brokers in the last 10 years has truly impacted upon and changed the financial markets forever. Years ago it was incredibly difficult for the average person to tap into the vast financial markets of the world, let alone profit from it.  Now it takes nothing more than a smartphone and a solid internet connection and you’re in. It’s a far cry from what used to be the exclusive domain of investment bankers, Wall Street Tycoons and stock brokers with their fancy finance lingo, expensive suits and lavish lifestyles. Nowadays just about anyone can participate in the world of indices trading, forex trading, commodity trading and stock trading, and at a fraction of the cost too, thanks to the various ways in which one can trade and the fact that many online brokers provide these services to most parts of the world. Online trading has taken off significantly in Zimbabwe to the point that the country has its own online brokers providing citizens with all the tools necessary to trade online.  So, of all the available options out there, why shout Zimbabwean traders look to indices?

About Indices trading/index markets

Indices or index trading is a specific type of trading that focuses on a group of stock which make up an index. The index itself is a measurement of the value of a segment of the stock market – the index market is the accumulation of certain stocks and in many cases is representative of an economy. The index is compiled and calculated though the prices of selected stocks.  A much easier way to understand it all is to provide examples of indices/index markets. The FTSE 100, the Dow Jones Industrial Average, the Nasdaq, the Nikkei 225 and the SP/NZX 50 Index – these are all examples of index markets. Within each of the aforementioned index markets are various top companies that are required to meet some pretty high criteria. These companies are usually industry leaders and make up for the best of the country in which the index market is based or represents. Blue chip stock companies are often part of an index market. Also, because index markets are composed of top performing companies, they are used as measuring instruments for the economy as a whole and they are scored in points, hence you’ll oftenhear a financial analyst say something like “the Down Jones is down 8 points.”

Bets way to trade indices

If you’re going to trade indices or invest in UK and European companies for that matter, then spread betting is your best bet for a variety of reasons.  For one thing, it’s a more affordable way in which to conduct your trades as it doesn’t ask that you buy stock in a company or to invest in a company or an asset. Instead, when it comes to spread betting, you’re making estimations on the movement of an asset, stock price or in this case an index market. In other words you’re speculating on the rise or fall of the points of the Nasdaq, to make an example. You’re not investing in this major market or in one of the companies that forms part of its list.  And, because you’re making estimations and not buying stock, you’re spending a lot less money. This means that spread betting is more cost effective and lowers the barrier to entry.

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