Indices are highly popular among traders for their deep liquidity and almost 24/5 availability, while investors with a long-term approach often add them to their diversified portfolios.
The best indices brokers offer a wide range of indices with low trading fees, and my listing includes everything you need to know before deciding if you should consider trading indices.
- AvaTrade, Highly regulated, choice of fixed or floating spreads.
- Plus500, The best pricing environment for futures traders in the USA.
- Eightcap, 1:500 maximum leverage and cutting-edge trading tools.
- BlackBull Markets, 1:500 maximum leverage with ultra-low trading fees and deep liquidity.
- Pepperstone, Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platform.
AvaTrade
In Summary Highly regulated, choice of fixed or floating spreadsThe choice of indices and generous leverage of up to 1:200, depending on traders' geographic location, make AvaTrade one of the best indices brokers on my listing. Traders get competitive commission-free trading fees on indices, starting with a mark-up of 0.25 points for the S&P500. MT4/MT5 support algorithmic indices trading, but AvaTrade also offers its proprietary WebTrader and mobile app AvaTradeGO with Trading Central services.
AvaTrade provides beginners with its MT4 Guardian Angel plugin and the fee-based Ava Protect insurance policy shielding against losses. The high-paying partnership program features 70,000 registered partners and $250,000,000+ in commission payouts.
Pros & Cons
- High quality educational offering via AvaAcademy
- Excellent choice of trading platforms catering to various trading needs
- Broad asset selection and cross-asset diversification opportunities
- Well-regulated and trusted broker with oversight from a central bank
- Trading costs competitive but nothing special
Plus500
In Summary The best pricing environment for futures traders in the USAPlus500 offers commission-free indices trading with spreads from 0.70 points on the S&P500. It also has the VIX and an NFT index. Traders can manage their indices with the user-friendly, web-based proprietary trading platform and mobile app, which only supports manual trading but includes a great sentiment-based indicator.
Beginners receive quality research via the data-driven analytical tool +Insights. Plus500 also publishes ESG scores and provides real-time email, SMS, and push notifications based on price alerts, percentage-based hourly and daily price changes, and sentiment changes.
Pros & Cons
- Broad asset selection in equities and options
- Free and unlimited demo account
- Advanced free-of-charge analytical trading tools
- Global and regulated fintech platform
- Sub-standard trading platform without support for automated or social trading
Eightcap
In Summary 1:500 maximum leverage and cutting-edge trading toolsEightcap established itself among the best Forex brokers due to its superb trading infrastructure, excellent order execution amid deep liquidity, competitive fees, and cutting-edge trading tools. Manual traders get a well-designed AI-powered economic calendar. MT5 traders benefit from Flash Trader, while the dedicated cryptocurrency solution Crypto Crusher caters to cryptocurrency traders.
Copy traders get the embedded MT4/MT5 services, and Eightcap connects social traders to the active TradingView community. Beginner traders get an outstanding educational and research offering via Eightcap Labs and Eightcap Trade Zone.
Pros & Cons
- Low minimum deposit and high leverage of up to 1:500
- Competitive cost structure
- Excellent technology infrastructure and seasoned management team
- Daily research and quality educational content
- Limited leverage in some areas
BlackBull Markets
In Summary 1:500 maximum leverage with ultra-low trading fees and deep liquidityBlackBull Markets was founded in 2014 in New Zealand. Like many antipodean Forex brokers, BlackBull Markets is an ECN broker, offering raw spreads and commissions. They are regulated in New Zealand by the Financial Services Providers Register (FSPR) and offer a maximum leverage on some Forex currency pairs as high as 500 to 1. In addition to their global headquarters in New Zealand, BlackBull Markets also has presences in the form of branch offices in New York and Malaysia. BlackBull Markets offers a relatively tight range of tradable assets: 27 Forex currency pairs and crosses, gold, silver, crude oil, natural gas, and 6 major equity indices. That should be sufficient for those traders with more focused strategies not requiring wide diversification.
Pros & Cons
- ECN/NDD execution model with deep liquidity
- Institution-grade pricing for retail traders via proprietary price aggregation
- ZuluTrade and Myfxbook for social trading
- Leverage of up to 1:500
- Limited deposit options
Pepperstone
In Summary Great ECN execution on MT4/5, cTader, TradingView and Pepperstone proprietary platformI rank Pepperstone among the best indices brokers due to its cutting-edge trading environment. Indices start with a spread of 0.40 points on the S&P 500.
Pepperstone upgrades MT4/MT5 with the 28-plugin Smart Trader Tools package and Autochartist, while APIs allow traders to connect advanced algorithmic trading solutions to the Pepperstone infrastructure. Social traders can connect their Pepperstone account to TradingView and engage with 50M+ peers. Fee-based Signal Start caters to copy traders in addition to the embedded MT4/MT5/cTrader copy trading services and Copy Trading by Pepperstone.
Pros & Cons
- Excellent choice of trading platforms consisting of MT4/MT5, cTrader, TreadingView and Pepperstone Platform
- Market-leading MT4/MT5 upgrade package, Autochartist, and API trading
- Social trading support via Signal Start, MetaTrader Signals, Copy Trading by Pepperstone, DupliTrade
- Leverage of up to 1:400 depends on jurisdiction and superb trade execution
- Demo accounts have 60-day time limits
| | | | | |
Regulators | ASIC, BVI, Central Bank of Ireland, FFAJ, FSCA, KNF, MiFID | ASIC, CFTC, CySEC, EFSA, FCA, FMA, FSCA, MAS, NFA, SCA | ASIC, CySEC, FCA, SCB | FMA, FSA | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB |
Year Established | 2006 | 2008 | 2009 | 2014 | 2010 |
Execution Type(s) | Market Maker | Market Maker | ECN/STP, Market Maker | ECN/STP, No Dealing Desk | No Dealing Desk, NDD |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 0.9 pips | 1.1 pips | 1.0 pips | 1.1 pips | 1.1 pips |
Average Trading Cost GBP/USD | 1.5 pips | 1.4 pips | 1.2 pips | 1.55 pips | 1.4 pips |
Average Trading Cost Gold | $0.29 | - | $0.12 | 0.12 pips | $0.15 |
Trading Platform(s) | Other, MetaTrader 4, MetaTrader 5, Proprietary platform, Web-based+ | Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Trading View | MetaTrader 4, MetaTrader 5, cTrader, Trading View | Other, MetaTrader 4, MetaTrader 5, cTrader, Proprietary platform, Trading View+ |
Islamic Account | |||||
Negative Balance Protection | N/A | ||||
| Visit Website | Get Started Visit Website79% of retail CFD accounts lose money | Visit Website | Visit Website | Get Started Visit Website75-95% of traders on margin lose |
What is Indices Trading?
Indices trading, as offered by the best indices brokers, involves trading a basket of stocks grouped regionally, by sector, or thematically. It decreases risk and profit potential compared to individual stock picking.
The Two Most-Used Methods of Calculating the Index Value
- The market capitalization weighted method, where the most capitalized companies have the most notable impact on price action.
- The price-weighted method, where the price move influences the index, allows even the smallest company to take price action if its price changes dramatically.
Most indices follow the market capitalization-weighted method, which more accurately reflects the economic strength of their respective economies, sectors, or themes.
How Indices Trading Works for Traders and Brokers
Trading with the best indices brokers materializes via derivatives and not by owning the underlying asset.
The Three Most-Traded Index Derivatives
- CFDs - most non-US-resident traders will trade index CFDs, which mirror price action 1:1 and are the best asset for traders.
- Options - traded mostly by US-resident traders, as they cannot trade CFDs.
- Futures - pre-dominantly traded by institutional traders.
Noteworthy:
- ETFs have surged in popularity, with 10,000+ global ETFs offering a broad-based choice of regional or thematic indices.
What is the Minimum Deposit to Trade Indices?
The minimum deposit to trade indices depends on broker requirements. The best indices brokers often ask for a $100 minimum deposit to open an account but recommend more capital, as $100 does not suffice to manage an efficient or effective portfolio.
Is Synthetic Index Trading Better Than Stock Index Trading?
One asset class or sub-class is not better than another class or sub-class, as it depends on individual preferences and requirements. The best indices brokers will offer a combination of synthetic and stock indices.
Who Should Trade Synthetic Indices and Why?
Synthetic indices are instruments created using a mathematical formula to simulate market dynamics instead of deriving their value from actual assets, like stock indices. They are ideal for advanced traders seeking specific sector or thematic exposure. ETFs are the go-to method for trading synthetic indices, but some are available as outright indices like the VIX, the US Dollar Index, or the Philadelphia Semiconductor Index.
Who Should Trade Stock Indices and Why?
Stock indices are an excellent choice for all types of traders and a solid entry point for beginners. They are straightforward to analyze due to plenty of historical data, simple to trade, and available at most brokers.
Is Index Trading Regulated?
Index trading is not regulated, but the best indices brokers offering index trading are regulated. Traders should always double-check a broker's regulatory status and avoid unregulated brokers, even if they promise superior trading conditions.
The Most Traded Stock Market Indices
The list of the most-traded stock market indices changes annually but features many of the same names in different places. The best indices brokers provide traders with most of the indices on the list below.
The most-traded stock market indices according to the latest available data:
- NASDAQ 100 - Average daily volume of 5.737 billion.
- S&P 500 - Average daily volume of 4.996 billion.
- Hang Seng - Average daily volume of 2.929 billion.
- FTSE 100 - Average daily volume of 905.890 million.
- Dow Jones Industrial Average - Average daily volume of 393.460 million.
- DAX 30 - Average daily volume of 77.469 million.
- Russell 2000 - Average daily volume of 49.965 million.
- CAC 40 - Average daily volume of 47.827 million.
- Euro STOXX 50 - Average daily volume of 39.468 million.
- Bovespa - Average daily volume of 9.842 million.
Trading Indices - Pros & Cons
Before trading with the best indices brokers, traders should consider the pros and cons of indices trading.
The Pros of Indices Trading
- Decreased risk.
- Less volatility.
- Many sector-and-thematic-based choices.
- Diversification.
- Hedging potential.
The Cons of Indices Trading
- Decreased profit potential.
- Not all indices are created equally.
Bottom Line
The best indices brokers provide traders with an excellent infrastructure, including choice of indices, leverage, trading fees, algorithmic trading, and additional tools to ensure a competitive edge.
