If you follow the stock market and are interested in the ASX 200, gathering the exchange’s main facts and this important list of its top firms is important. There are plenty of indices based on different exchanges worldwide, the ASX (Australian Securities Exchange) being just one of them. Many purchase shares of companies listed on it daily during its business hours, which run Monday through Friday, from 10 a.m. until 4 p.m. Here’s a quick rundown of what the ASX 200 is, how its members are selected, and some ways to trade it. Hopefully, this will give you a better idea about the ASX 200 before you dip your toes in the trading waters.
How are the 200 Chosen?
Industry regulators check every three months to see if any of the 200 members have changed. To be in that group, a company must be one of the top 200 in capitalization. A few corporations often drop out, and others move in to replace them. This repositioning takes place regularly and works to keep investors assured that the ASX contains the top corporations.
You Can Trade It Via CFDs
ETFs (exchange-traded funds) allow investors to participate in this diverse, popular financial instrument. You can’t buy the index as is often assumed, but there are two straightforward ways to get exposure to all the companies in it. One is through an ETF, as noted above. Those funds closely track the value of the entire Australian list of 200 stocks.
An even easier strategy is trading an ASX CFD (contract-for-difference). With CFDs, you can go long or short and directly in this important financial instrument’s rising or falling values. Another advantage of using a CFD is that you can use leverage to control a much greater security amount than you’d be able to do otherwise.
Origins and Recoveries
The year 2000 was the first year you could buy shares in the 200 indexes. At that time, its value was set to 3,133 to coordinate with the All Ordinaries. Like all other stock markets, it’s had good and bad times. Most recently, the Australian Two-Hundred, as it’s often called, has ranged from a high of nearly 7,200 in February 2019 to a COVID low of around 4,550.
Fortunately, it has been clawing its way back to pre-virus strength, with values as high as 6,400. Many investors prefer to manage their portfolios by buying CFDs and ETFs of the various indices available at most brokerage firms. It’s a simple way to participate in the wider marketplace rather than choose winners and losers from individual stock lists.
