James Trescothick

With more than 20 years of experience in financial service industry, James is our Senior Global Strategist and the co-producer and presenter of easyMarkets educational videos. When he is not working on educational programs or preparing webinars, you can find him with the easyMarkets team giving seminars around the world.

Video Script: Discover trading SP500 (Standard and Poor 500)

The buzz and excitement of the stock market, where fortunes can be made and lost.

High profile traders look for opportunities to spread their portfolio across a broad spectrum of many different company stocks.

The question is, can a trader of smaller means do the same?

Good news; the answer is yes! Hi I’m James and I would like you to join me as we discover the markets. Today we are looking at Indices, in particular the SP500; probably the most followed Indice of them all. The aim is that by the end of this video, you will have a better understanding of this trading instrument.

So what is an Indice? Let’s find out

A Indice, sometimes called index, in financial terms is an imaginary portfolio of securities representing a particular market or sometimes just a portion of it.

The SP500 stands for Standard and Poor 500 as it tracks the 500 most widely held stocks on both the New York Stock exchange and NASDAQ.

You can find it on our platform under the name US500

For any company to be part of the SP500, it must be based in the U.S. with a market cap of at least $5.3 billion.

Now the five largest companies in the SP500 includes, Apple, Microsoft, Exxon Mobil and Johnson & Johnson.

The SP500 is a measurement of the stock market and can itself be used as an economic indicator for the health of the US economy.

So what are some ways to keep watch the SP500 you ask?

One of the first things you need to consider is economic sentiment; pro tip when the market is optimistic it tends to look to invest into riskier assets like the SP500 and while when the market is nervous and fearful, it tends to move its money into safe havens, like the USD, JPY, CHF and Gold.

The SP500 also has a strong correlation to other markets, so it is a good idea to keep an eye on the performance of other Indices such as the DAX and the FTSE100 when trading SP500.

To help you analyze market sentiment you can often refer to our insider viewer.

It is also a good idea to keep an eye on certain US economic indicators that can affect business growth of the 500 companies listed on the SP500. These include,

  • US GDP
  • Unemployment rate and job growth|(NFP)
  • Consumer Price Index
  • Retail sales

Another thing is to keep eye on major headlines about some of the 500 companies listed on the SP500. For example, ask yourself how is Apple’s new product release affecting the company? And how will this affect the indice?
Another wise tip is to be aware of earning reports, which are often published quarterly by public companies and show earnings, expenses and net profit.

To summarize the things to be aware of when you are considering trading SP500 index:

  • Market Sentiment, risk on risk off
  • Performance of other Indices such as the DAX or the FTSE100
  • US Economic indicators, like the US GDP and retail sales
  • Headlines on certain companies
  • And Earnings reports

Join me next time, when we will discover OIL,
Till then thanks for watching, you trade safe!

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