Stock indices are some of the most popular instruments on forex platforms, and three US indices dominate: the US30, the US500 and the US100. Each represents a basket of American stocks, and each behaves differently. For Canadian traders, the TSX offers a home-market option too.
I trade all of them, and I like each for different reasons. Here’s how they differ, when they move, and what makes trading them different from trading currencies.
The big three US indices
| Platform name | Index | What’s in it | Personality |
|---|---|---|---|
| US30 | Dow Jones Industrial Average | 30 large US companies, weighted by share price | Big point moves, but driven by a small group of companies |
| US500 | S&P 500 | About 500 large US companies, weighted by size | The broadest picture of the US market; usually steadier |
| US100 | Nasdaq 100 | 100 large non-financial Nasdaq companies, heavily weighted to tech | Often the most volatile and momentum-driven |
Platform names vary by broker; you may see US Tech 100, NAS100, SPX500 or Wall Street 30. They all track the same underlying indices.
A quick way to think about them: the US500 is the overall mood of the US market, the US100 is that mood amplified through tech, and the US30 reflects a narrower group of large, established companies.
And the TSX
For Canadian exposure, brokers may offer a CFD on the S&P/TSX 60 or a similar Canadian index. The TSX is heavier in banks, energy and materials than the US indices, so it reacts more to oil prices, interest rates and the Canadian economy. It’s typically less volatile than the US100, and some brokers offer wider spreads on it because it’s traded less. Check what your broker offers and how it’s priced.
How indices differ from forex
Indices and currencies respond to many of the same forces, but the way they move is different.
- Momentum. Indices can trend hard in one direction for hours, especially at the open.
- Risk-on, risk-off. Indices are risk assets. When investors are confident, they rise; when fear takes over, they can fall fast. Sell-offs are often sharper than rallies.
- Company news. Earnings from the largest companies can move an entire index, especially the US100, where a handful of tech giants carry a big share of the weight.
- Exposure per lot. The value of each point of movement depends on the instrument and your broker’s contract. A lot size that feels normal on EUR/USD can carry far more risk on an index. We explained this in stock trading courses in Toronto.
When indices move, from Toronto
| Time (Eastern) | What happens |
|---|---|
| Overnight | Index CFDs usually trade on futures, so they move outside US hours, but more slowly |
| 8:30 a.m. | Major US data, like jobs and inflation, can jolt futures before the open |
| 9:30 a.m. | The US stock market opens: the busiest, most volatile part of the day |
| 10:00 a.m. to noon | Direction often settles |
| 2:00 p.m. | Federal Reserve decisions, when scheduled |
| 4:00 p.m. | US cash market close |
| Around 5:00 p.m. | Daily break and rollover on many platforms |
The exact trading hours for index CFDs vary by broker, including a short daily break, so check yours. Our guide to spreads, commissions and swaps explains why the rollover period is worth avoiding.
What’s moving indices right now
A few big themes matter heading into November:
- The US midterm elections on November 3. Control of Congress affects expectations for spending, taxes and regulation, which can move different sectors in different ways. Our midterm elections guide covers how to handle election week.
- Earnings season. Third-quarter earnings run through late October and into November, including the large tech companies that drive the US100.
- Interest rates. Higher rates and bond yields tend to weigh on growth and tech stocks in particular.
- Trade and tariffs, which affect company profits and the broader outlook.
Sizing index trades safely
Indices are where traders coming from forex most often get hurt by size. Before trading any index:
- Check the contract specification: the value per point and the minimum lot size.
- Look at the typical daily range, in points, over recent weeks.
- Set your stop based on that range, wider than you’d use on a major currency pair.
- Calculate the dollar risk from the stop distance and point value, and size so it matches your normal risk per trade.
- Be careful around the 9:30 open and major earnings, when moves are fastest.
Oversized index positions are a fast route to a margin call; see our guide to margin calls and stop-outs.
Which index should a beginner start with?
If you’re new to indices, the US500 is often the easiest place to learn. It’s broad, liquid, and usually less erratic than the US100. Once you understand how it behaves around the open, data and earnings, the US100 and US30 make more sense. For a broader look at choosing between markets, see forex vs stocks.
The bottom line
The US30, US500 and US100 each track a different slice of the US market: a narrow group of large companies, the broad market, and tech-heavy growth stocks. The TSX adds Canadian banks, energy and materials. Compared with forex, indices bring more momentum, sharper sell-offs and bigger exposure per lot. Learn their timing from Toronto, from the 8:30 data to the 9:30 open, keep an eye on the midterms and earnings, and size every trade from the contract specification and the stop.
Disclosure: The author, Mike Harding, founded Academy of Financial Markets in Toronto and teaches its mentorship program. This article is educational and is not financial advice. Trading indices on margin carries a high level of risk and may not be suitable for all investors.