Fundamental Analysis For Indices Trading

Fundamental Analysis For Indices Trading

Fri Mar 26 2021 07:03
Stock index trading is the same as stock trading, there is not much difference. The only different thing is you are not going to hold individual stocks. But there are a few more differences when you are analyzing stocks. No matter if you use technical or fundamental analysis for stock indices, you will see the difference. 

For indices trading, there are some differences in fundamentals used for analysis. Indices trading for beginners is not that useful because it requires trading experience. And when it comes to analysis, then it becomes more difficult. 

Conducting fundamental analysis also requires experience. But when you do it with the proper procedure then you can achieve success. 

Detailed use of Fundamental Analysis For Indices Trading 

Here we are with the complete information about fundamental analysis for indices trading. Here we will let you know which tools you can use for the fundamental analysis for indices trading. Along with this, fundamental analysis requires particular fundamentals to be tracked. 

Don't worry if you don't know about these fundamentals and properties that you need to track. Because here we will discuss the process along with all the factors of stock indexes. 

Understand Some Basics 

Let's start everything with the basics. All the traders start with choosing a broker, but there is something more important. The most important thing is to check the traded assets and the market. 

After that is also important to analyze the assets of the particular market with high volatility and liquidity. Without knowing more about the assets you cannot analyze them in the best way. 

Indices Trading 

Stock index trading is trading a group of stocks or companies with the help of a stock index. A stock index is something like a benchmark used by traders to invest their money under particular conditions. 

Without any doubt, you will invest through a trading platform and you will be investing in stocks. But you are not going to buy or sell stocks. You can use day-trading, swing trading or any else trading technique that you prefer. 

Stock Trading 

We will mention it as individual stock trading as you can trade stocks individually here. Here you will be trading stocks by buying them without even considering the grouped index or market benchmark. 

How Are They Different? 

Both of these trading options are available for all traders on online platforms. But which one is better and how are they different from the fundamental analysis? We have to look at fundamental analysis with a close eye when choosing both of the trading styles. 

Fundamentals are different for both kinds of trading and also some charting tools are different. But, the fundamentals or the factors that impact the stock market is still similar. 

Finding The Fundamentals 

Before you make a strategy to buy-and-sell stocks or indices equities, you need to analyze them. But what are these fundamentals when we are buying and selling stock indexes? Well, it depends upon various factors and the types of stocks that you are going to choose. 

From the stock-market to particular stocks, there are different fundamentals. Following are some common and major fundamentals used to analyze indices. 

Sector-Level Fundamentals 

The first type of fundamentals in the stock-exchange is sector-level fundamentals. These fundamentals are concerned with the sector-based stock indexes. 

Economic Fundamentals 

These are always at the top when we are looking for the fundamentals or the indicator to analyze and buy stocks. Trading strategies based upon technical analysis that is made with technical indicators. 

And when it comes to fundamental analysis these fundamentals of the global market are tracked. Many online brokers provide all the detailed data on their sites about the same. 

Individual Stock Prices 

Indices trading is different from individual stock trading. But still, individual stock-price is considered for trading and analyzing. Whether long term or short term, buyers and sellers need to consider the stock price in an index. 

Top Movers 

Always try to find the present and past performance of the top movers of your chosen stock index. These stock indexes move towards a direction with the help of top movers. You need to track all these top moving stocks in your market index. 

Top Losers 

As there are top movers, there are some top losers also. These stocks play a very less role in moving a stock index. Also, you need to consider this as an indicator while you buy and sell stocks through an index as a stock trader. 

Market Sentiment 

Along with the above factors, market sentiment is also a vital factor to consider. Whether it is bullish or bearish, it is always necessary to track when you trade indices. 

Market News 

Same as the forex market, you need to track the stock market news here in indices trading analysis. Market commentary is always important because it keeps you aligned with active trading. 

Macroeconomic Factors 

Macroeconomic factors are hard to track for beginners. Most of the time novice traders look at the market makers and most impacting factors. But in any market trading, you need to track all the macro-level factors too. These factors are sometimes very important and if ignored they can make you lose money. 

Three Major Factors Of Indices Trading & Its Analysis 

You can track all these indicators and analyze the stock index and its fundamentals for a price forecast. But still, there are three important factors that you have to consider as a stock index trader. These three factors are explained in all the major trading courses. 

If you have gone through a trading course, then you must have heard these three factors. You must have to learn how to trade the stock index using these three factors. Following are these three factors. 


Keep in mind that you are going to make money with the help of a benchmark. A stock index is the market benchmark, which is followed by most of the investors in the market. 

A stock index is not meant for direct stock market investing. Rather than this, it is used as a benchmark to understand the stock market game. 

Segment Based Factors 

There are sector and segment based stock indexes in various markets. From global to regional stock markets, there are different investment choices among traders. Some traders make an investment strategy based on segment and sector. 

These industry-specific factors are always there to impact the stock index. Sometimes big changes in the particular segment the whole market capitalization faces impact. 


Sometimes traders are making investment portfolios that are diversified. They add different investment instruments to their portfolio with the help of diversification. It helps them to manage the risk that they have in the market. Diversification is vital to consider while doing this analysis for the stock index. 

Final Thoughts 

Stock indices trading is not easy and analysis for the stock index needs practice. But, it is not right to say that beginners cannot do it. No matter if you are a beginner, you need to perform it with the help of the right fundamentals. It is different from technical analysis and retail traders control many factors. 

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