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Getting to know Stock Index Trading

Getting to know Stock Index Trading

Did you know that the combined stock index of an exchange can also be traded. Index trading as part of stock futures investing is actually nothing new anymore. Here what is calculated is the value of local stocks, can be positive or negative. In Indonesia alone there is a Composite Stock Price Index (JCI). However, generally the trade is crowded are outside indices such as Japan with the Nikkei 225, Korea with the Kospi, Hong Kong with Hangseng, and the United States with the Dow Jones. In this article we will discuss the Nikkei 225, Hangseng, and KOSPI stock indexes.

Nikkei 225

July 1970 Nihon Keizai Shimbun, Inc. Proposed a better system of calculating stock indices, which until now has been known as the Nikkei 225 stock index. The index is a composite of 225 selected companies, with specific requirements. The selected company is a company that has large assets and has good credibility in the market.

For that to be able to be traded, also formed Nikkei 225 stock index futures (Futures). Which in its development is in great demand by investors, from Japan itself and international investors.

Like other futures indices, it is also traded for future submissions, just like other Futures contracts. The futures are traded on margin that serves as collateral for the trader to meet his obligations. Buyers are required in advance to pay a certain amount of margin by the time they have taken a position.

KOSPI 200 (Korea)

KOSPI index
Korean Composite Stock Price Indexes

The KOSPI is the main stock index in South Korea consisting of the 200 most liquid major stocks traded by the Korea Stock Exchange. For seven consecutive years, since opening in May 1996, kospi transaction volumes far surpassed the volume of futures and other derivatives in the world.

KOSPI 200 Futures is a very popular futures product at this time. Thanks to kospi 200 futures and options, the Korea Stock Exchange (KSE) became the number one futures exchange in the world in terms of volume traded, beating the Chicago Mercantile Exchange, Tokyo Commodity Exchange, EUREX, American Stock Exchange and others.

Although the KOSPI 200 specification is similar to that of the Nikkei 225 for example for contract units, contract months and number of components, its own character is more similar to the Hang Seng due to the calculation method used. Unlike the Hang Seng and Nikkei, kospi has a higher correlation to Asian markets compared to the American market.

Also Read: Tricks to Control Capital Market Risk

Hang Seng (Hong Kong)

The Hang Seng Index (HSI) is a comulative stock index of 38 blue chip stocks from the Hong Kong stock market, which is one of the trusted stock indices, which investors and fund managers use to invest. The value of these shares constitutes 70% of the capitalization value of all shares listed on the exchange.

To fulfill the desire of investors to be able to transact the HIS index, as one of the tools for hedging positions, the Hong Kong Futures Exchange (HKFE), first introduced hang seng index futures trading in May 1986, and then followed by hang seng index option contracts in March 1993.

With the futures and binary options market, investors have more instruments to manage the risk of their portfolio. The popularity of Hang Seng Index Futures continues to increase gradually, along with the influx of investors from abroad, both from institutions and individual investors.

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