Why Trade Indices Instead Of Shares?
Here are a few of the advantages of trading indices instead of individual shares:
- More available leverage than trading shares - The leverage possible with Index future contracts creates a profitable environment for even trades of a few percent index gain.
- Less technical analysis - investors are able to spend more time on analyzing one chart, then trying to screen through thousands of stocks for the right company
- High liquidity - The highly liquid market also creates tighter spreads which translates into less money spent per transaction.
- No need to screen stocks for fundamental data - A lot of time is saved from not having to analyze financial reports. The trader will spend most of his time looking at the big picture and overall market sentiment.