How to trade 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 the S&P 500 here.

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If you want to trade the S&P 500, follow these three steps:

1. Decide how you’d like to trade the index

There are a few ways to get exposure to the S&P 500. These include trading ETFs and shares, or trading on the index’s value.

2. Formulate a trading plan

Before opening a position on the S&P 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 your CFD trading account – start by filling in our application form.

To help you decide how to trade in the US 500, we explain each method in detail below.

How can you trade the S&P 500?

There are three main ways to trade in the US 500 (the S&P 500) with us:

Trade the S&P 500 the index directly
Trade S&P 500 ETFs
Trade S&P 500 shares

Trade the S&P 500 index 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 speculating on it
Trade the index under the name ‘US 500’ on our platform
Access the index 24 hours a day, Monday to Friday
Get more liquidity than trading the S&P 500 in other ways
Trade on the index’s actual price (ie its level) using CFDs without having to own any S&P 500 company shares
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

Open a live account to trade the S&P 500

Trade S&P 500 ETFs

Enjoy broad exposure to the 500 biggest companies in the US, all at once with ETFs
Instead of opting for trading the current price of the S&P 500, you can choose to trade the ETF’s price, calculated on its net asset value (NAV)
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

Open an account to trade ETFs

Trade S&P 500 shares

Take a position on S&P 500 stocks like Berkshire Hathaway, Alphabet, Apple and more – without taking ownership of actual shares with CFD share trading
Target specific stocks aligned with your strategy without gaining exposure to the entire index
Share CFDs attract a minimum commission of $15

Open an account to trade S&P 500 shares

	Trading the S&P 500 directly	Trading in a S&P 500 ETF	Trading in S&P 500 shares
Account types	CFD trading account	CFD trading account	CFD trading account
Market hours	24 hours a day, Monday to Friday and until 6am Saturday (UTC+8)	Trade in US-listed S&P 500 ETFs when the New York Stock Exchange is open – 10.30pm to 5am Monday to Thursday and 10.30pm on Friday to 5am on Saturday (UTC+8). Markets for all sessions stocks are available from 4pm to 8am, Monday to Thursday and 4pm Friday to 5am Saturday (UTC+8).	When the US stock market is open, from 10.30pm to 5am, Monday to Thursday and 10.30pm on Friday to 5am on Saturday (UTC+8). Markets for all sessions stocks are available from 4pm to 8am Monday to Thursday and 4pm Friday to 5am Saturday (UTC+8). See our after-hours times to trade out of hours on top US shares.
Timeframe	Short to medium term	Short to medium term	Short to medium term
Liquidity and execution	0,0107 second execution speed and unique deep liquidity¹	Higher liquidity offered by trading the index directly	Higher liquidity offered by trading the index directly
Costs	Commission-free. Trading the S&P 500 index on the spot (cash) incurs overnight fees, but index futures don’t incur these fees.	CFD cash (spot) ETF trades incur overnight fees and have a minimum commission of $15.	CFD cash (spot) trading incurs overnight fees and have a minimum commission of $15.

How to start trading the S&P 500

If you're ready to start trading the S&P 500 (called the US 500 with us), follow these five steps:

Create your trading account
Open your first S&P 500 position
Learn what moves the S&P 500 index's price
Finetune your S&P 500 trading strategies
Discover what else you need to know about the S&P 500 index

Create your S&P 500 trading account

With us, you can open a CFD trading account to begin trading in the S&P 500.

Open your first S&P 500 position

How you’ll do this depends on the type of trade you’ve decided to open:

Trading CFDs on the S&P 500

With contracts for difference (CFDs), you’re entering into a contract to speculate on the price of the S&P 500 or the share price of a company listed on the index. 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 S&P 500: cash indices

One of the most direct ways to trade the S&P 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 S&P 500 pricing than you would with futures, as 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 low spreads and no commission 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 S&P 500: index futures

Trading index futures via CFDs means you’re agreeing to trade the S&P 500 at a specific price on a specific date in the future.

When you trade S&P 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 S&P 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 speculate 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 risk as much as your premium paid, but selling options is technically unlimited risk, as there’s no restriction to how much a market’s price can rise.

Trading CFDs on S&P 500: ETFs

If you want to gain exposure to a basket of S&P 500 shares all in one place, you can trade ETFs. Exchange traded funds (ETFs) are investment instruments that track the performance of a range of S&P 500 stocks, to give you variety with lower commissions.

ETF commissions start from just 2 cents per share, with a minimum fee of $15 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 S&P 500: shares

With CFD share 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 has a minimum commission charge of $15.

Learn what moves the S&P 500’s price

The key to making a profit when trading the S&P 500 is to have a good understanding of the index – including what drives the index’s price up or down. These include:

Individual S&P 500 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 index’s price will climb. If the companies’ share prices by and large fall, so will the S&P 500.

Finetune your trading strategies

Once you have enough knowledge of the S&P 500, have created your trading account and are ready to open positions, it’s time to perfect your strategy.

Here are six things you can do to up your chances of success trading with the S&P 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 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 S&P 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

Discover what else you need to know about the S&P 500

There are still many things to learn about an index as complex and as popular as the S&P 500. Here are just a few more answers to common questions:

What are the S&P 500 index’s trading hours?

The normal market hours for the S&P 500 are the same as other US indices. These are 9.30am to 4pm EST (Eastern Standard Time), which is 10.30pm to 5am (UTC+8). However, with us you can trade 24/5, to best take advantage of significant market events that may not keep office hours, like earnings season.

How is the S&P 500 price calculated?

The S&P 500’s price is calculated mainly by its constituent companies’ latest share prices. It’s a market capitalisation-weighted index, which means that the larger a company is by market capitalisation, the more ‘weighting’ it will have compared to smaller companies and the more materially it will affect the S&P 500 price.

The market capitalisation is determined by the number of publicly traded shares each company has. To determine the index price, all these public S&P 500 stocks are divided by a proprietary index divisor.

Find out more about what an index is and how to trade it

FAQs

What are the ways you can trade the S&P 500?

There are a few ways you can trade the S&P 500 with us. Open a CFD trading account to trade the S&P 500 index, 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, Meta, 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 Average speed calculated from 1 to 28 February 2022.

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