FBS turns 16
The S&P 500 is a stock market index that tracks the stocks of 500 large US companies. It reveals the stock market’s performance by comparing the risks and revenues of these companies.
Traders use this index as a benchmark of the entire American market. S&P stands for Standard and Poor, the names of the two founding financial companies. S&P 500 is one of the oldest and most well-known stock indexes in the world.
The S&P 500 is based on the market capitalization of the companies. The market cap or the market capitalization is the total sum of all shares of stock that a company has issued. For example, a company with 20 million shares selling at $50 a share would have a market cap of $1 billion.
The total market cap of the S&P 500 was $21.42 trillion in March 2020. This index covers roughly 80% of the available US market capitalization, and it is often used as a measure of the US economy’s economic strength.
Firstly, you can trade contracts for difference (CFDs) on the S&P 500. So, CFDs copy the S&P 500 movement.
Secondly, you can use leverage or, in other words, control bigger financial positions while investing a smaller amount of money. Always remember that leverage allows you to multiply your account, but it also increases your potential losses if the market goes against you.
Thirdly, you can trade the market in both directions. In other words, you can gain from the price going down as well as from its increases.
Finally, the S&P often gives really clear signals to traders. We regularly post our fundamental and technical analysis to help you use these signals properly.