When you trade indices, you eliminate all of the outside noise and focus solely on the broad trend of the market. Trading indices also allow you to capitalize on opportunities that arise between different sectors, asset classes, and countries.
However, to fully realize the benefits of index trading, it’s important to carefully select the right broker. Whether it’s industry-leading commissions or access to the most reliable assets, our guide will help you find the Best Index Trading Platform in no time!
In This Guide
Offering the best combination of value, service, and platform features, below, you’ll find the best index trading platform as well as the top alternatives. For in-depth analysis of each, you can also scroll down for more information:
68% of retail investor accounts lose money when trading CFDs with this provider.......
Your capital is at risk.......
Because the devil is in the details, it’s important to analyze all of the pros and cons before making your decision. However, to make the journey a little bit easier, we’ve reviewed the best index trading platforms and trading apps to help you find the right broker for you.
Topping our list, eToro is simply a cut above. With access to more than 2,400 stocks spanning 17 international markets, eToro’s 0% commission structure allows you to trade all of your favourite assets without incurring undue fees.
To determine which broker is the best index trading platform, it’s important to differentiate cost from efficiency. However, with eToro, you get the best of both worlds, as the U.K. broker is fully functional across all major exchanges – including stock markets from the NYSE, NASDAQ, FTSE 250, FTSE 100 and London Stock Exchange (LSE) – and you have access to both full and fractional shares.
Top-rated across nearly all categories, eToro is one of the best index trading brokers in the business. More importantly, though, eToro is a name that you know and trust: regulated by the U.K. Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC) in Australia, CySEC, and U.S. FINRA, eToro’s commitment to transparency is second to none.
What’s more, if you’re new to trading and need a helping hand, eToro’s CopyPortfolios uses an innovative algorithm to construct a portfolio that’s tailored to your risk tolerance. As a result, you can feel confident knowing that your investments have the highest probability of success when you use this free trading platform.
Your capital is at risk.
Founded in 1997, Libertex has roughly 2.9 million clients worldwide. Specializing in CFDs, Libertex is one the best index trading brokers in the marketplace today.
In addition, Libertex accepts deposits via bank transfer, debit/credit card, and e-wallet and all deposits are free of charge. What’s more, withdrawals made through Skrill are always free, while withdrawals via other methods include a charge of €1 to 1%.
Unfortunately, though, Libertex does not offer 0% commissions. However, a 50% reduction is available for professional clients.
For a detailed breakdown of Libertex’s commission structure, please see below:
Cementing its position as one of the best indices trading platforms, Libertex’s demo trading account is extremely useful. Rather than having to risk your own capital right away, you can trade with €50,000 in virtual money and enjoy all of the platforms’ features free of charge with the demo account. Even better, all of Libertex’s services are fully functional on desktop, laptop, Apple iOS, and Android devices for mobile trading, as well as using its research tools.
You can also use Libertex’s demo paper trading platform to try the broker out before trading with real money.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74,5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money
Combining education with excellence, TD Ameritrade’s powerful platform, and its functionality helps you become a better trader and a smarter trader. As one of the best index trading platforms and online brokers, TD Ameritrade’s personalized educational service is tailored to your specific needs. Through interactive courses and webcasts, its commitment to knowledge makes TD Ameritrade one of the best indices trading platforms.
Offering 0% commissions and a bevy of advanced charting tools, finding the best index trading platform has never been easier. At the click of a button, you can trade through its brokerage accounts assets and financial products such as stocks, bonds, CDs, options ($0.65 commission per contract), non-proprietary mutual funds, futures, forex, and commission-free ETFs – all while enjoying a live stream of CNBC.
As the best trading platform for long-term investors, TD Ameritrade also grants access to Morningstar, CFRA, and TheStreet’s fundamental research reports, and the firm is fully regulated by U.S. FINRA.
Keep in mind though: you can only deposit funds through bank transfers and e-wallets aren’t accepted at this time.
TD Ameritrade fees
In the running for the best index trading platform, Charles Schwab’s StreetSmart Edge combines sophisticated technology with an easy-to-use layout. Finding, evaluating, and placing a trade has never been easier, and you can access the stock trading platform online or through Charles Schwab’s cloud platform.
Moreover, stocks, index ETFs, preferred shares, and REITs always trade commission-free, while index futures ($1.50 per contract) and index options ($0.65 to $1.50 per contract) also enjoy competitive pricing. However, despite being one of the best trading platforms for index funds, cryptocurrencies are not listed among Charles Schwab’s tradable assets, if you are more interested in crypto or forex, our TD Ameritrade vs Charles Schwab review goes over this in more detail.
Like other exceptional brokers, Charles Schwab’s technology works seamlessly on all desktop, laptop, Apple iOS, and Android devices, while the company’s Idea Hub can help you identify bullish, bearish, and neutral trade ideas all in real-time.
What’s more, its interactive Trade & Probability calculator allows you to effectively manage risk, while Micro E-mini futures allow you to trade all major indices at 1/10th the size and with lower margin requirements.
Charles Schwab fees
With access to stocks, options, futures, currencies, bonds, and investment funds from a single integrated account, Interactive Brokers could be the best index trading platform. Through its proprietary technology, you can optimize your trading strategy and perform sophisticated technical analysis. What’s more, commissions begin at $0 (for U.S. listed stocks and index ETFs), while commissions on index options ($0.15 to $0.65 per contract) and index futures ($0.25 to $0.85 per contract) are also extremely competitive. Even better, for both IBKR LITE and IBKR PRO accounts, there is no minimum balance required.
If choosing IBKR Pro, clients also have access to the IB SmartRouting system – which saves roughly $0.47 per 100 shares and ensures that your trades execute at the best possible price.
Providing access to equity and bond indices on 28 exchanges across 14 countries, including short ETFs and leveraged ETFs, Interactive Brokers allows you to trade both index futures and index options. Even better, the platform is accessible across a wide variety of countries, including the U.S., U.K., Germany, and France.
Interactive Brokers fees
As more of a niche broker, Plus500 could be the best index trading platform for CFDs. As a publicly-traded entity that’s regulated by the U.K. Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC), Plus500 is a trusted CFD broker.
Combining an easy-to-use platform with exceptional customer service, Plus500 shares a lot of similarities with our other best index trading platforms. Offering a $100 account minimum and no withdrawal fees, Plus500 accepts deposits in 16 different currencies as well as an e-wallet. And not offered by all brokers, Plus500’s demo trading account allows you to build your confidence before risking any of your hard-earned capital.
As the only downside, Plus500 does not allow scalping. Defined as “A trading strategy based on the notion that client transactions are opened and closed within 2 minutes in order to accumulate quick profits from small price changes,” if you buy and sell index CFDs on a minute to minute basis, you could have your account blocked.
Despite that though, Plus500’s platform works seamlessly on all Apple iOS and Android devices, so mobile traders should be extremely satisfied with the broker’s service.
72% of retail CFD accounts lose money.
Last but certainly not least, Fidelity offers commission-free trading on all U.S. stocks, ETFs (including indices) and charges $0.65 per option contract (including indices). Clients also have access to analyst reports that cover more than 4,500 stocks and span more than 20 independent, third-party research firms.
In addition, Fidelity’s advanced charting features, streaming quotes and option to manage up to 50 stocks as a single basket, cements its position as one of the best index trading platforms. For mobile aficionados, Fidelity’s app also includes all of these great features on one easy-to-use interface.
As well, because Fidelity is well-known for its industry-leading wealth management services, you can manage your Individual Retirement Account (IRA) both directly, and with the help of a Fidelity financial advisor. Keep in mind though: Fidelity does not offer index futures or index CFDs, and although its margin rates are extremely competitive, they’re still higher than Interactive Brokers. To see how Fidelity matches up with other brokers, check out our Fidelity vs TD Ameritrade comparison review.
To determine the best index trading platform for you, consider your time horizon, risk tolerance, and your preferred assets. If you’re an active trader, nearly all of the above options fit the bill. With access to real-time data and advanced charting tools, you can’t go wrong with any of the above names.
However, if you have a low-risk tolerance, avoid CFDs, futures, and options, and stick with trading index ETFs. Because the formers have leverage, you can gain/lose more on a single trade. Conversely, with index ETFs, the majority are equity-based, which means that gains/losses are similar to individual stocks.
Finally, always trade what you know. If you’re unfamiliar or uncomfortable determining margin requirements or analyzing option ‘Greeks,’ stick with index ETFs. Conversely, if you’re a sophisticated trader that’s looking to generate alpha, index CFDs, futures and options can greatly enhance your PnL.
Rather than analyzing individual stocks, index trading allows you to speculate on an entire basket of equities, bonds, commodities, or even volatility.
Because not all products are created equal, it’s important to understand the difference between cash indices, index CFDs, index futures, and index ETFs.
For starters, cash indices allow you to invest in the cash value of an underlying index. Unlike options and futures, there is no expiry date and transactions are executed immediately. Second, index CFDs allow you to participate in the movement of an index without having to own it or having to take physical delivery. Because most CFDs are cash-settled, you either receive or pay the net difference on the settlement date.
Third, index futures allow you to buy or sell an index at a future date based on a price that’s agreed upon today. Finally, index ETFs have no expiry date and can be used for short-term and long-term trading. However, you have to pay the entire cash balance upfront and you also incur portfolio management expenses.
Allowing you to significantly reduce risk, indices are less volatile than individual stocks. Because the index return is the sum of the returns of the underlying constituents, a single stock doesn’t make or break its performance. Moreover, indices are much better option for trading macroeconomic divergences. For example, if you expect the European economy to outperform the U.S., you can buy the DAX 30 index and sell the S&P 500 index. Thus, trading indices allows you to focus on the macroeconomic environment without having to worry about idiosyncratic events.
Common among experienced traders, continuation, reversal and breakout index trading strategies are quite popular:
Using the old adage, ‘the trend is your friend,’ traders will hold an index as long as it remains in an uptrend. For example, as long as an index holds its 20-day and/or 50-day moving averages, technicals signal that the ascension will likely continue. The logic is: if the index is trending, why bet against it?
In stark contrast, reversal traders often analyze an index’s Relative Strength Index (RSI). When an index’s RSI rises above 70 (overbought), it’s likely to suffer a short-term decline. Conversely, when an index’s RSI falls below 30 (oversold), it’s likely to experience a short-term rally. Likewise, Bollinger Bands is another useful indicator. Plotted two standard deviations above and below an index’s moving average, when the price rises to the upper Bollinger band, it’s likely to fall, and when the price declines to the lower Bollinger band, it’s likely to rise.
Drawing triangles and pennants on the chart, narrow price action can help traders capitalize on an index’s breakout. Taking the shape of a horizontal triangle (think of a sideways ice cream cone), when an index shifts from having large price swings to trading in a tight range, it will often ‘breakout’ one way or the other. When this occurs, index traders can confidently take advantage of the new trend.
Setting the standard, eToro makes index trading a breeze. To get started, simply follow the steps below:
By clicking the “Join Now” button at the top of eToro’s homepage, you’re only a few steps away from accessing the best index trading platform available.
Next, you’re prompted to enter a username, password, and email address. You also have to provide your first and last name, date of birth, home address, and mobile number. For security purposes, eToro also confirms your mobile number via text message.
To verifiy your identity, you need to submit a copy of a valid driver’s license or passport, plus a utility bill or bank statement issued within the last three months. Most often, verification takes less than a few minutes and you can begin index trading immediately.
Requiring a minimum despot of $200, you can choose from the following U.K. payment methods:
Even better, apart from a U.K. bank transfer, the above deposit methods are processed instantaneously.
Using the search function at the top of the page, you can enter the name of the index or the ticker symbol. For example, you can enter “SPX500”.
Once you click on the index’s symbol and select the “Trade” button, you choose between a market order or a limit order. Next, you enter how much you want to invest and hit “Open Trade.” Once completed, eToro will send you a transaction confirmation and tthat’s it – you’ve made your first index trade!
If it isn’t clear by now, index trading is your gateway to efficient capital allocation. By eliminating stock-specific risk and following the broad trend, index trading allows you to actively manage your portfolio without incurring all of the unnecessary stress.
However, before you begin your journey, selecting the right broker is nearly as important as selecting the right investment. The more comfortable you are with the platform the easier it is to effectively implement your strategy. And checking off every box, eToro is by far the best in the business. Combining a transparent free structure with access to all major indices, partnering with eToro is a great way to get started!
Mechanically, index trading is analogous to trading stocks: you determine your strategy, determine your time horizon and enter/exit your positions in a manner that achieves your unique goals.
Yes. Leveraged index ETFs and index options have embedded leverage, while index CFDs and index futures allow you to finance a portion of your position by borrowing money from your broker.
Yes. Algorithmic and quant traders often specialize in trading indices and their alert services are readily available.
Index ETFs are subject to the same tax laws that govern stocks. However, governments often impose higher taxes on short-term capital gains than long-term capital gains. And though regulations vary depending on your country of origin, the tax treatment of option contracts is often less favorable than stocks, while the tax treatment of futures contracts is often more favorable than stocks.
Alan is the Chief Editor of TradingPlatforms.com. He is an experienced finance and investment writer who is an expert on the stock market.
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