Why eToro is Best for Index Trading

An index is one of the most liquid markets to trade. Through exposure to an entire sector at once and more trading hours, you stand a chance of making more profit.

In choosing a platform for your index trading, it is necessary to choose one that has sufficient trading facilities. With the right tools, trading is easier, and eToro is one brokerage that provides a rich platform for successful trading. 

The various order types, amongst other features, enable you to execute a trade at the price of the security at the market closing. We will see other factors that make this multi-asset brokerage the best for index trading.

What is Index Trading?

An index provides a way to measure the performance of a group of assets (stocks) and their prices over time. The aim is to help investors with accurate information to make informed investment decisions. When you get to know the past and current, you can know if the stock is worth investing in.

Through a stocks index, investors can also have a clue of the overall stock market performance. The index serves as a tool to benchmark an investor’s performance. 

Notable examples of stock indices include the S&P 500 which is seen as a representation of the overall performance of the US stock market. The S&P 500 index tracks the performance of 500 large-cap US companies. The Dow Jones Industrial Average (DJIA) tracks the performance of the 30 largest US companies.

So index trading is simply buying and selling of the index of a particular stock market. You can speculate that an index price will rise or fall and this, in turn, will determine whether you will buy or sell.

Basically, in trading stocks, you are not buying a real underlying stock, rather the average performance of a group of stocks. The value of the index rises alongside an increase in the price of the sticks within the index and vice-versa.

Index Trading with eToro

eToro is a brokerage that provides a platform for investors to trade several assets; cryptocurrencies, stocks, CFDs, and ETFs. The company has branches in more than 140 countries with millions of users. eToro is known for having Powerful trading features that allow its users to have the best trading experience. 

The best way to trade in an index on eToro is through Contracts For Difference (CFDs). This approach enables you to gain even when stock prices fall. You can use a short sale strategy when you expect the index to fall and a long buy position when you expect a rise.

There are two major types of CFDs you can use: index Futures and cash indices. Investors who are investing for long-term purposes prefer to go for index Futures because unlike the cash indices overnight funding charge is added to the widest spread. Traders decide on the future price for the index futures

Cash indices seem to be better for traders looking out for a short-term return because their spreads are tighter than index futures. Cash indices do not use future price as a trading parameter, rather the spot price – the current price of the underlying market.

Why eToro is Best for Index Trading

One advantage of trading indices with eToro is that the platform makes the process quite easy – it is straightforward. eToro’s platform is easy to use, traders have the opportunity to trade a ton of major stock indices. In addition, they can access information on the prices of stocks and the general performance of the index you have invested in. All you need is a trading account to start trading indices with eToro.

The CopyPortfolio and CopyTrader are two brilliant patented features of eToro that allow you to search and copy other traders’ real-time portfolios to trade. The platform allows you to use ‘leverage’ to trade a larger amount of money if the money you have in your account is limited for trading. This increases the profit you stand to get. 

With the availability of analysis tools, it is possible to make a substantial profit regularly. And without it, you will be almost making investments in the dark. The one-click trading and management of order types are beneficial if you want to take them into account as you trade.

Also, eToro does not charge you for transactions when you use CFD for index trading. Where the fee applies is when you need to use spread – between the buy and sell price of the trade.

eToro has a mobile app that is almost as effective as the web version, for Android users. On your mobile app, you can access virtually all the tools and information that is available on the web version. The platform is committed to keeping its users updated on market information; detailed and accurate market data is accessible to you.

The educational features provide you with everything you should know about index trading. You’ll get to understand how to do the fundamental and market analysis to ensure you make an informed decision and optimize your investment for profit.

The training school, online videos on the YouTube channel, and tutorials are all equipped with every basic information you need to know which stocks to choose. You can measure the profitability of a stock index.

How to Place a Trade on eToro 

  • Create an account if you do not have one or log in if you already have an account 
  • Proceed to the Markets page, and then select Indices for a full list of indices
  • Select the index you want to trade and then select Trade
  • Depending on the direction you want to trade, choose either BUY or SELL
  • Enter the amount you want to use for the trade or the  number of units you want to trade
  • Set the stop loss, leverage, and take profit parameters. There are four order types available on the platform; market, limit, stop-loss, and trail-stop loss. You can choose any depending on what you want.
  • Click on  Open Trade 

Conclusion 

eToro trading platform is best for index trading. With an easy-to-use interface and rich trading tools, you can make quick profitable investments. The educational resources are an advantage to especially inexperienced traders on the platform.

Some links that may help you

Why not have a look at our article on why we feel eToro is the best to trade single stocks on