The index based trading involving CFD or contract for difference in Forex Exchange Trading is based on speculation and the overall state of the stock market. However, it differs from share trading in a stock exchange. This is because in stock market transactions, we are more concerned with the value of a specific stock rather than the whole market. However, the index represents a sector comprising of similar companies, so to a great extent, a trader is concerned with the performance of the whole sector rather than just the individual company.
The most popular indices for CFD trading online are S&P 500, Dow Jones and FTSE 100. So a trader dealing in index market makes a contract to exchange the difference of the price for certain index over two points of time. We know that there are two parties involved in similar types of contracts and these are called as buyers and sellers….