Learn To Trade the Australia 200 Index
Learning to trade the ASX 200 index will allow you to take advantage of price movements of the largest 200 company’s in Australia, without having to analyse all 200 stocks individually.
The Australia 200 index, better known as the ”Aussie 200” is one of the most popularly-traded markets in Australia. One of the major benefits in trading this index (as opposed to trading individual stocks), is that you do not need to scan dozens of individual stocks to find trading opportunities. Instead, you can focus on one market – the Australia 200 Index – and speculate whether you think the price of the index will go up or down.
What Is The Australia 200 Index?
The S&P/ ASX 200 index (“the Aussie 200″) measures the performance of the leading 200 companies listed on the Australian Securities Exchange.
Each company has a specific weighting within the index – the larger the company (by market cap), the greater their overall weighting.
As an example, a massive company like Commonwealth Bank, with a market cap of c., $125B, accounts for around 7-8% of the ASX 200 index. A smaller firm, like Crown Resorts Limited (CWN) with a market cap. of c., $9B accounts for around 0.50%. If CBA’s share price was to move, so would the ASX 200 index; however if Crown Resorts Limited saw a surge in their stock price, it’s unlikely the ASX 200 would be moved much, if at all.
Recommended Brokers That Offer The Australia 200 Index CFD:
Leading
CFD Brokers
Who are they?
Standard Leverage
Regulation
Min. Deposit
Segregated Bank Accounts?
ASX Stock Commission
Australia 200 spread
Wall St 30 spread
AUD/USD spread
Spread Type
Trading Platform
Next Steps
Low-Cost
CFD Provider
200:1
SCB
$0
0.07% with $5 min.
0.9pts - FIXED
1pt - FIXED
0.6 pips - FIXED
Fixed
CloudTrade, MT4
Fast-Growing
CFD Broker
30:1 (AU)
ASIC, FCA
$100
No ASX stocks
1pt
From 1.6pts
From 0.5 pips
Fixed & Variable
cTrader or MT4/ MT5
World-Leading
CFD Broker
30:1 (AU)
ASIC, FCA, MAS
$100
0.08% with $5 min.
1pt
1.6pts
From 0.5 pips
Variable
How Do You Start Trading The ASX 200 Index?
To start trading the Australia 200 index, you’ll firstly need to open a trading account with a regulated CFD broker. Once your account has been approved and you’ve funded the account, you are ready to start trading.
It is important to remember that when you trade the ASX 200 CFD index, you are not buying the underlying market asset, but instead you are simply speculating on whether the value of the index will increase or decrease.
For example, if you think the ASX 200 CFD index will rise in value, you would open a BUY trade (“going long“) and if you think the value of the ASX 200 will decrease, you would make a SELL trade (“going short“).
Example:
- After conducting some analysis, you believe that the ASX 200 is going to rise in value during the week.
- You open a BUY trade with the ASX 200 price at 6,020.
- Later that week, you see that the ASX 200 has risen to 6,080 and decide to exit the trade for a profit.
- You have made a 60 point profit (6,080 – 6,020).
- If the ASX 200 had fallen in value, to say 5,980, you’d have lost 40 points.
The Australian 200 Index Trading Day
The ASX 200 or Australia 200 index as its known on most CFD trading platforms, starts trading at 09:50 AEDT Mon-Fri. This is exactly 10 minutes before the general ASX market opens. The Australia 200 will close at 16:30 AEST, 30min after the close of the ASX. There is also a night session that opens at 17:10 each week day – this extended session trades through the European and US market sessions, closing at 08:00.
ASX 200 Index Volatility
There are two parts of the ASX trading day that typically produce the most amounts of volatility; and those are in the first hour after market open and in the last hour of the trading day.
During the lunch session and middle of the day, there is generally less volatility, although if there are any news announcements (employment numbers, an RBA interest rate decision etc.), then this can be an exception to the rule as this sort of news will move the ASX 200.
The Australian market is also hugely affected by news out of China, our largest trading partner. When China makes any sort of bold market announcement, the tremors are felt here in Australia – so this can also move the Australia 200 index.
What Are Some of The Benefits of Trading The ASX 200 Index?
Leverage
When you trade the Australia 200 index using a CFD trading platform, you are trading using leverage. This means you only need to deposit a small fraction of money onto your trading account in order to open significantly larger position sizes. For example, to open 1 x ASX 200 contract, you’d only need $30- $40 on your account. Even though the notional value of that trade is around $6,000! Remember, leverage can help magnify trading profits however it can also magnify losses.
Trade the Australia 200 Index in Rising and Falling Markets
With CFD trading, you can go LONG and SHORT. That is, buy and sell financial markets. For example, if you think the ASX 200 is overvalued and will fall, then you can make a SELL trade. You would profit if the Australia 200 market does fall. This is a major benefit of trading using CFDs compared to traditional stock buying.
Access To 1000’s of Global Financial Markets
When you open a CFD account, you gain access to the ASX 200 index and many other global assets. The trading possibilities are endless – trade indices, FX, commodities, stocks, cryptocurrencies and more.
Our Recommended ASX 200 Index CFD Broker
TD365.com are the best and lowest-cost CFD broker to trade the Australia 200 index CFD with. You can trade the Australia 200 at a 0.9 point spread with TD365 – the lowest in Australia and around the world, which represents excellent value.
Their trading platform is simple & easy-to-use; markets are easy to find and the trading interface is well positioned – far less complicated than other platforms. If you’re looking for a low-cost broker with tight fixed spreads, then TD365 is for you.
TD365.com – Australia 200 Index CFD Specifications:
- Trading hours: opens Monday morning 09:50 to Friday close.
- Fixed spread during hours: 0.9 points
- Out-of-Hours Spread: 2 points
- Expiry date: None
- Contract months: Rolling
- Margin required: 0.50% (Leverage of 200:1)
- Guaranteed Stop-Losses: Yes
