How to trade or invest in the S&P 500
The S&P 500 index, called the US 500 with us, tracks the 500 largest companies in the USA. Learn the different ways to trade or invest in the S&P 500 here.
Start trading today. Call +971 (0) 4 5592108 or email sales.ae@ig.com. Our sales team is available from 8:00am to 6:00pm (Dubai time), Monday to Friday.
Contact us: +971 (0) 4 5592108
Start trading today. Call +971 (0) 4 5592108 or email sales.ae@ig.com. Our sales team is available from 8:00am to 6:00pm (Dubai time), Monday to Friday.
Contact us: +971 (0) 4 5592108
You can get exposure to the S&P 500 via the US 500 with us. You can’t trade or invest in the S&P 500 directly. Follow these three steps to open a position:
1. Choose whether to trade or invest
You can harness the power of the S&P by trading or investing in ETFs and individual shares or trading on the index’s value.
2. Formulate a trading plan
Before opening a position on the US 500, you'll decide whether you're a short-term or long-term trader and how you're going to manage your risk.
3. Open a live account
Create and fund any or all of the following accounts – CFD trading and stock trading – start by filling in our application form.
To help you decide whether you want to trade or invest in the US 500, we explain each method in detail below.
How can you trade or invest in the S&P 500?
Trade the US 500 price directly
- Get exposure to the largest corporations in America from a single trade
- You will not be buying or selling the actual index cash price but instead predicting on it
- Trade the index under the name ‘US 500’ on our platform
- Access the index 24 hours a day1
- Gain exposure to the S&P price in a market with higher liquidity
- Trade on the US 500’s price using CFDs without having to own any company shares
- Instead, you’ll put down a deposit to open a larger position, with profits and losses calculated on the full position size – so profits and losses can substantially outweigh your initial margin
- Go either ‘long’ (if you think the price will rise) or ‘short’ (if you think the price will fall)
- Trade commission-free with CFDs as charges are included in the spread
Trade or invest in S&P 500-related ETFs
- Enjoy broad exposure to the 500 biggest companies in the US, all at once with S&P 500-linked ETFs
- Gain exposure to the index price over the long term
- Buy and sell S&P 500-related ETFs listed in the US at zero commission2 on our stock trading platform, and hold for as long as you like
- Use CFDs to trade ETFs and go long or short – note this offers lower liquidity and higher spreads than trading the index directly
- When you trade with leverage, profits or losses can significantly outweigh your margin amount, as both are based on the total position size
- Invest in the actual stocks included in the S&P 500 on our stock trading platform, from zero commission2
- Take a position on S&P 500-listed stocks like Berkshire Hathaway, Alphabet, Apple and more – without taking ownership of actual shares, with CFDs
- Target specific stocks aligned with your strategy without gaining exposure to the entire index
- Trade share CFDs attract a minimum commission of $15
|
Trading the US 500 price directly | Trading or investing in a S&P 500-related ETF | Trading or investing in S&P 500-listed shares |
Account types |
CFD trading account |
CFD trading account to trade or a stock trading account to invest |
CFD trading account to trade or a stock trading account to invest |
Market hours |
24 hours a day1 |
Trade in US-listed S&P 500 ETFs when the New York Stock Exchange is open – 6.30pm to 1am Monday to Friday (Dubai time).3 |
When the US stock market is open, from 6.30pm to 1am Monday to Friday (Dubai time).3 Also, invest or trade out of hours on top US shares. See our after-hours times. |
Timeframe |
Short to medium term |
Short to medium term for trading and long term for investing |
Short to medium term for trading and long term for investing |
Liquidity and execution |
0.013 second execution speed4 and unique deep liquidity |
Higher liquidity offered by trading the index directly |
Higher liquidity offered by trading the index directly |
Costs |
Commission-free.
Trading the US 500 on the spot (cash) incurs overnight fees, but index futures don’t incur these fees. |
With stock trading, you can invest in UK-listed ETFs with no commision5 up to 50 trades per month.
With a commission charge of 2 cents/share on each side of the trade for CFDs.
Cash (spot) ETF trades incur overnight fees, but forwards don't. |
With stock trading, you can invest in UK-listed ETFs with no commision5 up to 50 trades per month.
With a commission charge of 2 cents/share on each side of the trade for CFDs.
Cash (spot) trading incurs overnight fees, but none for index forwards. |
How to start trading or investing in the US 500
If you're ready to start trading or investing in the S&P 500 (called the US 500 with us), follow these five steps:
Create a trading or investing account
With us, you can open two different account types: CFD trading account or a stock trading account.
| CFD trading | Stock trading |
| Predict on the price of the index, shares and ETFs rising or falling | Buy and sell underlying shares and ETFs |
| Leverage your exposure – you’ll only pay a deposit to get exposure to the full position size | Pay the full value of the shares or ETFs you buy upfront |
| Leverage means both profit and loss will still be magnified to value of the full trade – so you could gain or lose money faster than you’d expect | You may get back less than you put in because the value of shares and ETF can fall as well as rise |
| Take shorter-term positions | Focus on longer-term growth |
| Trade without owning the underlying asset | Take ownership of the underlying asset |
| No shareholder privileges | Gain voting rights and dividends (if paid) |
Learn what moves the US 500 index’s price
The key to making a profit trading or investing on the US 500 is to have a good understanding of the index – including what drives its price up or down. These include:
- Individual S&P 500-listed companies’ share prices – particularly the larger ones
- Earnings reports of those companies
- The strength of the US dollar
- Economic events
- News releases
Ultimately, if the above cause rises in S&P 500-listed companies share prices – particularly larger companies like Alphabet, Amazon, Tesla or Apple – the US 500’s price will climb. If the companies’ share prices by and large fall, so will the US 500.
Finetune your trading strategies
Once you have enough knowledge of the US 500 and you’ve created your trading or investing account, it’s time to perfect your strategy.
Here are six things you can do to up your chances of success when trading on the US 500:
- Find the best trading style for you: do you want to buy and hold over the long term? Or rather trade specific market events in the space of hours and minutes, not days? Understanding whether you are a short-term, medium-term or long-term trader will determine your best trading strategy. Trading styles include scalping, day trading, swing trading and position trading
- Use technical analysis and indicators: trading or investing to cash in on market sentiment and trends is the key to profits. Trading indicators and technical analysis are vital, as they can help to identify tell-tale signals and trends within the market, so you can strategise accordingly
- Look for trading signals: another thing that can help you determine current trends are trading signals with momentum indicators such as the stochastic oscillator or relative strength index (RSI)
- Study charts and price action: studying price charts and price action, both recent and older, can help you recognise patterns to determine current market sentiment and help you spot lucrative trends to trade when they appear
- Set trading alerts: of course, no one can watch the market all the time, which is why we give our clients access to trading alerts. Input your chosen alerts when opening a position and you’ll be notified once your alerts are triggered by email, SMS or push notification
- Follow industry news: significant macroeconomic news will affect the US 500’s price, as will company and sector news that affects share prices of big stocks on the index. So, it’s a good idea to keep an eye on breaking news. To help you, we have a current news feed on the trading platform that is updated in real time, as well as our news and trade ideas
Open your first trading or investing position
How you’ll do this depends on the type of account you’ve decided to open:
Trading CFDs on the US 500
With contracts for difference (CFDs), you’re entering into a contract to take a position on the price of the US 500 or the share price of a company listed on the S&P. You’re agreeing to exchange the difference between the price of the index or shares when you open your position versus when you close it, for either profit or loss.
Trading CFDs on the US 500: cash indices
One of the most direct ways to trade the US 500 using CFDs is on the spot (cash) price of the index itself.
Trading the spot price means you get closer to the real-time US 500 pricing than you would with futures. This is because prices are based off our future’s price with a fair value adjustment to get as close to the real-time cash price as possible, plus there’s low spreads and no commission charged on indices.
As spot trading does come with overnight funding fees if you leave a position open overnight, this form of trading is best suited to short- and medium-term strategies.
Trading CFDs on the US 500: index futures
Trading index futures via CFDs means you’re agreeing to trade the US 500 at a specific price on a specific date in the future.
When you trade US 500 futures with us, you won’t pay additional overnight funding charges or commission, as the cost is built into the spread. This is why futures have wider spreads than spot positions.
Trading CFDs on the US 500: options
CFD options give you the right, but not the obligation, to exercise the contract on or before its expiry date. When you trade options via CFDs, you’ll pay an initial deposit (called premium) to open a larger position. You’ll then predict on the option’s premium for a profit or loss – but note that both can significantly outweigh your deposit amount.
This is because profits and losses are calculated on the full position size, not the premium amount, so ensure you manage your risk wisely.
Remember, buying options is limited risk as you’ll only expose your paid margin. But selling options is technically unlimited risk, as there’s no restriction to how much a market’s price can rise.
Trading CFDs on the US 500: ETFs
If you want to gain exposure to a basket of S&P 500-listed shares all in one place, you can trade S&P-tracking ETFs. These are investment instruments that track the performance of a range of S&P 500-listed stocks, to give you variety with lower commissions.
ETF commissions are 2 cents/share on each side of a CFD trade, with a minimum fee of $10 for online orders. Just bear in mind that you’ll be trading on the cash (spot) price with ETFs, so there are funding charges you could incur if you leave your position open overnight.
Trading CFDs on the US 500: shares
With CFD trading, you won’t own company shares outright. Unlike owning company shares, which means you can only make a profit if the share price goes up, you can go long or short when trading.
While owning shares means paying the full share price upfront, CFD trading is leveraged. This means you’ll pay only a small deposit amount (called margin) to open a larger position.
However, as profits and losses will be calculated based on your total position size, these can substantially outweigh your margin amount, so ensure you always trade within your means and manage your risk.
CFD share trading enjoys very low spreads, as we charge no spread on our side with you only having to pay the underlying spread price, and a minimum commission charge of $15.
Investing in the US 500 with stock trading
Stock trading is the outright purchasing of either S&P 500-listed company shares or of an S&P 500-tracking ETF.
When you invest in this way, you’ll pay the full value of the share price upfront, with no leverage. This means you’re not at risk of your losses or profits outweighing the amount you put in. Instead, you’ll only make a profit if the share price rises beyond your original buy price.
Buying with stock trading: S&P 500-tracking ETFs
When investing in ETFs with us, you’ll pay commissions as low as $0 per trade5 up to 50 trades per month.
Because this is a form of investing, S&P 500-related ETFs are best suited to medium- to long-term positions or a ‘buy and hold’ strategy.
Buying with stock trading: S&P-listed shares
Buying company shares means you won’t get exposure to the entire US 500, but does mean that you can choose the S&P-listed stocks most closely aligned to your individual trading strategy.
You’ll purchase those shares for the full current share price upfront and then buy and hold. With this method, you can make a profit from dividends or selling the shares for a higher price at a later date.
FAQs
What are the ways you can trade or invest in the S&P 500?
There are a few ways you can trade or invest in the S&P 500 with us. You can open a CFD trading account to trade the S&P 500 index and trade or invest in S&P 500 stocks or an S&P 500-tracking ETF. You can also trade the index via options and trade on the cash (spot) price or futures.
What are the stocks on the S&P 500?
The S&P 500 is comprised of the 500 biggest corporations on any exchange in the United States. These include household names like Google’s Alphabet, Apple, Facebook, Microsoft, Amazon and Tesla.
The S&P 500 stocks are not chosen automatically, but are instead chosen by an index committee within the S&P 500. The committee sometimes elects new stocks or nixes other ones. This can happen once every few years or even several times in a year or two – although the latter is very uncommon.
How do companies join the S&P 500?
Companies join the S&P 500 by being agreed on by the S&P’s index committee. Companies cannot ‘lobby’ to join the S&P 500 but must instead be chosen.
However, there are also a few characteristics companies need to have to be eligible for inclusion in the S&P 500. They need to be a US company with the majority of their shares public, be of a certain size (a market cap of at least $11.8 billion) and have a sizable public float.
1 For US 500 24-hour dealing opens at 23.00 (London time) on Sundays. 24-hour dealing closes at 22.00 (London time) on Fridays.
2 Other fees and charges may apply. Please visit our Stock Trading charges and fees webpages for the full list of fees.
3 Please note that actual trading times are governed by local time in the country of the index's origin. Consequently, seasonal adjustments (such as daylight saving) in either the UK or the country of origin may cause times shown to be imprecise.
4 Based on IG Group's OTC data for Jun – Aug 23
5 Should you place over 50 trades on US shares, in a given month, IG reserves the right to charge you $5 per trade.
Contact us
New client: 00971 (0) 4 559 2108 or sales.ae@ig.com
Clients: 00971 (0) 4 559 2104
11:00 Saturday - 01:00 Saturday
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