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The S&P500 is one of the representative stock indices in the United States, along with the Dow Jones Industrial Average (US30) and Nasdaq (US100).
S&P500 TRADE (US500)
INVEST IN THE BEST COMPANIES IN THE U.S. WITH XM, WHERE YOU CAN TRADE WITH EVEN A SMALL AMOUNT. MOREOVER, IT CAN BE TRADED LIKE FOREX.
What is S&P 500 (US500)
The S&P 500, also known as the Standard & Poor’s 500 Index, is a stock market index that tracks the performance of 500 large publicly traded companies listed on the stock exchanges in the United States. The index is widely considered to be a barometer of the overall health of the US stock market and is often used as a benchmark for the performance of mutual funds and other investment vehicles.
The S&P 500 is a capitalization-weighted index, which means that the weight of each company in the index is proportional to its market capitalization, or the total value of its outstanding shares of stock. The index is calculated by dividing the total market value of the 500 companies by a divisor, which is adjusted to account for corporate actions such as stock splits and dividends.
The S&P 500 is a popular choice for investors looking to gain exposure to a broad range of large, well-established companies in the US stock market. The index is highly diversified, covering a range of sectors including healthcare, technology, consumer goods, and financial services.
S&P500 (US500) with XM
The S&P500 is one of the representative stock indices in the United States, along with the Dow Jones Industrial Average (US30) and Nasdaq (US100).
Unlike other overseas Forex, XM offers both spot and futures trading with the S&P500, each with its own advantages and disadvantages.
The Dow Jones Industrial Average represents the stock index of 30 representative US companies, while the S&P500 encompasses 500 companies. Since it covers many companies, it is considered to be more reflective of the US economy.
Even amid the coronavirus pandemic, we see daily updates of its highest prices. It is highly popular among investors as an investment target, with many investors accruing profits. It is believed that the S&P 500 will continue to rise as long as the US economy performs well.
Even for those unfamiliar with stock prices, trading S&P500 with XM is as accessible as trading FX currency pairs. Let’s delve deeper into the “S&P500”.
Why Trade S&P 500 (US500) with XM?
At XM, we offer S&P 500 (US500) as both cash and futures CFDs. Our cash index CFDs are undated transactions that aim to replicate the cash price of the underlying index, and so they are adjusted for interest and dividends. Index futures CFDs expire on specific future dates and are cash-settled on the expiry date.
Benefits of trading S&P 500 (US500) with XM:
- Zero Commissions
- Zero Fees
- Low Margin Requirements
Trading Conditions
US500 CASH
Margin requirement | 100 % |
Description | US 500 |
Min. Price Fluctuation | 0.01000 |
Value of Minimum Price Fluctuation | USD 0.01 |
Value of 1 lot | 1 US 500 index |
Spreads as low as | 0.4 |
Min/Max Trade Size MT4 | 0.1/12500 |
Min/Max Trade Size MT5 | 0.1/800 |
Swap Value in Margin Currency Long | -0.73 |
Swap Value in Margin Currency Short | 0.09 |
Limit and Stop Levels | 0 |
US500 FUTURE
Margin requirement | 100 % |
Symbols | US500 |
Description | US 500 |
Min. Price Fluctuation | 0.01000 |
Value of Minimum Price Fluctuation | USD 0.01 |
Value of 1 lot | 1 US 500 index |
Spreads as low as | 0.8 |
Min/Max Trade Size MT4 | 1/12500 |
Min/Max Trade Size MT5 | 0.1/270 |
Limit and Stop Levels | 0 |
S&P500 FOR RISK DIVERSIFICATION INVESTMENT
The constituent stocks are well-balanced, which contributes to its popularity.
Constituents of the S&P500 (partial excerpt)
INDUSTRY | BRAND |
Finance | VISA |
Finance | JP Morgan Securities |
IT-related | Google/Microsoft/Amazon |
Aviation | American Airlines/United Airlines |
Automobile | Ford |
Apparel | Nike |
Food | Coca Cola |
Many other companies are included in the S&P 500. The S&P 500 offers a wide variety of industries and a good balance, providing the advantage of risk diversification compared to individual stock investment.
Some may think that handling stocks requires a substantial amount of assets. However, XM’s S&P500 (US500) is accessible even with a small investment amount.
Let’s explore whether trading the “S&P500” with XM is possible with a small investment amount.
SMALL INVESTMENT WITH XM POSSIBLE
The leverage when trading S&P500 (US500) at XM is different from FX’s “1000 times” and "Hundredfold" applies. However, since the investment target is major American companies, aiming for a large profit with even a small fluctuation in short-term trades is possible.
Now, let’s take a step-by-step look at how to trade the S&P500.
S&P500 (US500) TRADING PROCEDURE
Start MT4 → XM’s currency pair list “CFD Cash > US500-Cash” “CFD Futures > US500-SEP21”
“US500SEPs” is the English acronym that indicates the contract month (September). The last “21” indicates the last two digits of the year (2021). Please note that it is not a date.
POINT
FX currency pairs and lot numbers differ. For FX trading, 1.0 lot is 100,000 currency, but for US500, the minimum trading volume is 1.0 lot, and the profit and loss calculation method differs.
I believe you’ll find it easier than you thought once you check the procedure.
Next, let’s check the trading hours of the S&P500 (US500).
TRADING HOURS
S&P500 trading hours:
Summer time | Monday 06:05 to Saturday 04:10 |
Winter hours | Monday 07:05 - Saturday 05:10 |
There is also maintenance time, so please check the details from the provided link.
Now, let’s take a look at the formula for calculating the required margin.
We recommend checking your assets before trading.
The formula for calculating the required margin is as follows:
- S&P500 entry price x number of lots x 1%
- S&P500 margin requirement = 1%
Next, let’s examine the difference between “actual” and “future”.
DIFFERENCE BETWEEN CASH AND FUTURES
There are two types of CFDs on XM: spot and futures.
- Possibility of long-term holding: No deadline for futures
- Contract month: Position is liquidated when it expires. There is no expiration date for the actual product, allowing for long-term holding.
Futures require careful attention as positions will close on the expiration date.
Below is a comparison table for easy understanding.
THE ACTUAL THING FUTURES
- Spread narrow: About twice as much as the actual product.
- Dividend adjustment can be none, swap point can be none.
- Settlement deadline (contract month): None, can be.
POINT
After the due date, the trading chart cannot be displayed on MT4/5.
Next, let’s take a closer look at the “Spot” and “Futures” of the S&P500 (US500) based on the above comparison table.
THE REAL THING NARROW SPREADS
Spots have tighter spreads than futures.
In the case of US500, swap points and dividend adjustments are granted and collected for the spot, but the spread is narrow.
POINT
When trading across dates, futures are overwhelmingly more profitable in terms of transaction costs.
Next, let’s examine dividend adjustments and swap points.
CASH ONLY SWAP POINT & DIVIDEND ADJUSTMENT
Dividend adjustment
In CFD trading, you can receive dividend adjustment money in the same way as dividends obtained in actual stock trading.
“Buying” the spot → Granting of dividend adjustment money, “Selling” the actual item → Collecting the dividend adjustment money.
POINT
In XM, both “buy” and “sell” are negative swaps in the case of the spot of S&P500 (US500).
Now, let’s see which is better, “Spot” or “Futures”, depending on your trading style (day trading/swing trading).
BY TRADING STYLE RECOMMENDED BRANDS
- Spot → Day trade
- Futures → Swing trade
Futures are recommended for cross-date swing trading.
Just be careful to trade without forgetting the deadline.
Finally, let’s take a closer look at the benefits of trading the S&P500.
TRADE ON THE S&P500 BENEFITS
The benefits of trading the S&P 500 with XM include:
- Good compatibility with high leverage
- Peace of mind with the zero cut system
- No need to separate trading accounts
Merit 1
Good compatibility with high leverage
The S&P500 is compatible with high leverage, and the required margin rate of XM’s S&P500 (US500) is “1%”, with a maximum leverage of 500 times. This was raised from the previous maximum of 100 times to 500 times from November 2022 with Nikkei 225 (jp225). It is a target for traders who want to accumulate profits in a short period of time.
POINT
Many domestic FX S&P500 have a maximum leverage of only 10x.
Merit 2
Zero cut system feel safe in
Safe image with zero cut system
At XM, the zero cut system is applied to CFD trading as well as FX trading. In CFD trading, the window may open wide at the beginning of the week, so even if you focus on scalping, if you do not have a zero cut system for trades that span the week, Margin It is not safe because there will be a payment obligation due to “.
Merit 3
Separate trading accounts need
Domestic Forex companies and many securities companies also offer Forex and CFD trading, but each account is separate. With XM, you can share the margin with the same account, and there is no need to apply to create a new account.
So far, we have taken a closer look at “S&P500 (US500)”, which can be handled like FX trading with XM.
Finally, let’s check the “summary” of the S&P500 (US500).
SUMMARY: S&P500
The S&P500, an American stock index, tends to be easier to read than other CFD stocks and easy to trade as if you were dealing with FX currency pairs. As long as the US economy continues to perform well, we can expect it to continue to rise in the long run. The S&P 500 is also attracting attention from small investors and is popular as an asset management destination. Also, some people manage the S&P500 for retirement funds.
By using XM’s unique high-leverage zero-cut system, it is possible to invest and manage assets in 500 leading American companies with a small investment amount.
If you haven’t opened an account yet, please do so by clicking the link below.
How to Start Trading S&P 500 (US500)?
Step 1
Open an XM Real Account.
Step 2
Download and log in to either the MT4 or MT5 platform.
Step 3
Double-click on S&P 500 (US500) from the “Market Watch” to open an order for this instrument.
Visit the XM Official Website.
- Author:Jiroop
- URL:https://finance.jiroop.com/article/xm-trading-sp500-index
- Copyright:All articles in this blog, except for special statements, adopt BY-NC-SA agreement.
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