Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.
The EURO50, or EURO STOXX 50 (SX5E), is the leading stock index representing blue chip companies in the Eurozone. The 50 companies included in the index are the largest stocks from across all 19 supersectors, determined by their free float market capitalisation – or the proportion of shares available for trading. Around 60% of the STOXX Europe Total Market Index (TMI) is captured by the EURO STOXX 50 index, which is widely used as an indicator of business prosperity in the Western Europe region.
STOXX Ltd. are globally recognised providers of many innovative indices used by the financial services industry. The EURO STOXX 50 was the first index to be introduced by STOXX in 1998, and they now provide indices for many different sectors, regions and themes.
The 11 Eurozone countries represented in the EURO50 are Germany, Austria, France, Finland, Portugal, Spain, Ireland, Italy, Belgium, the Netherlands and Luxembourg.
The top blue chip companies that comprise the index are determined using the free float methodology to calculate their market capitalisation. This means that only readily available company shares are used in the calculation, not inactive shares. Many of the main index providers use this methodology, including FTSE and Standard and Poor’s.
The components of the index are reviewed each September, and a selection list is compiled by adding the current stocks from the EURO STOXX 50 index to the largest stocks from the 19 EURO STOXX Supersector indices, as classified by the Industry Classification Benchmark (ICB). The list is adjusted until it is as close as possible to a 60% match of the EURO STOXX TMI Supersector index, without exceeding this benchmark. The stocks on the resulting list are then ranked by their free floating market cap, and the largest 40 are included in the index. The final 10 are selected from highest ranking stocks remaining on the selection list.
Fast exit and entry rules also apply, allowing the index to be continuously updated to reflect the largest and most liquid stocks. The selection list is updated monthly, and is used to replace stocks that drop below 75 in their ranking position as well as to fast track stocks into the index if they qualify. This also helps maintain the stability of the index.
As at July 2017, the stocks included in the EURO STOXX 50 index were as follows:
|ADIDAS||Personal & Household Goods||DE|
|AIRBUS||Industrial Goods & Services||FR|
|ANHEUSER-BUSCH INBEV||Food & Beverage||BE|
|BCO BILBAO VIZCAYA ARGENTARIA||Banks||ES|
|BMW||Automobiles & Parts||DE|
|CRH||Construction & Materials||IE|
|DAIMLER||Automobiles & Parts||DE|
|DANONE||Food & Beverage||FR|
|DEUTSCHE POST||Industrial Goods & Services||DE|
|ENI||Oil & Gas||IT|
|ESSILOR INTERNATIONAL||Health Care||FR|
|GRP SOCIETE GENERALE||Banks||FR|
|Industria de Diseno Textil SA||Retail||ES|
|L’OREAL||Personal & Household Goods||FR|
|LVMH MOET HENNESSY||Personal & Household Goods||FR|
|SAFRAN||Industrial Goods & Services||FR|
|SAINT GOBAIN||Construction & Materials||FR|
|SCHNEIDER ELECTRIC||Industrial Goods & Services||FR|
|SIEMENS||Industrial Goods & Services||DE|
|TOTAL||Oil & Gas||FR|
|UNILEVER NV||Personal & Household Goods||NL|
|VINCI||Construction & Materials||FR|
|VOLKSWAGEN PREF||Automobiles & Parts||DE|
The Laspeyres formula is used to measure price changes against a base value and date of 1000 on December 31, 1991. Note that although the index was introduced in 1998, it was priced retrospectively back to 1986. The index is weighted by free float market capitalisation and the formula includes the number of companies, the price of each company, number of shares, a free float factor, and a unique index divisor which helps maintain index continuity following corporate actions, for example.
The detailed methodology is available in the STOXX rulebook: www.stoxx.com/indices/rulebooks.html
The index is licensed to brokers and other financial institutions for use as an underlying instrument for financial products such as futures, options, exchange-traded funds (ETFs) and contracts for difference (CFDs).
ETFs are provided by asset management companies and have holdings in all of the stocks that comprise the index, in order to mirror its overall performance. Their value is therefore determined by movements in the index, however traders can buy and sell ETFs as they would trade an individual stock. This allows them to follow the movements of the EURO STOXX 50 without purchasing holdings in all of the stocks in the index.
CFDs allow traders to speculate whether they believe the index will rise (prompting them to go long / buy) or fall (prompting them to go short / sell).
Different types of CFDs are available, for example, XM offer cash CFDs and future CFDs, both of which are linked to the index. Cash CFDs have no expiry date, whereas future CFDs expire on a specified date in the future.
When buying EURO STOXX 50 CFDs, traders will need to be aware of broker commission charges (where this is not zero), their spread, and the margin factor and pip value.
CFDs are a tax efficient trading product in the UK as they do not attract stamp duty, and losses can be offset against returns for tax treatment.
When trading CFDs using leverage, only a small portion of the actual trade value will be required for opening the position. This is known as the margin, and as it magnifies a trader’s exposure to the underlying index, it allows them to take advantage of small index movements. It should be noted, however, that trading with leverage also magnifies a trader’s exposure to market losses. Also, a daily interest premium is often levied for keeping the position open beyond trading hours due to the client trading on margin. The interest can be positive or negative, depending on whether the position is in profit or loss. CFDs are therefore mainly used as short term instruments.
As the index is composed of 50 companies, the risk is spread across the stocks; so if any one is affected by poor performance, the other stocks will help balance the index, reducing its volatility. When trading CFDs in the index, therefore, traders can benefit from a reduced risk of extreme fluctuations. Furthermore, an astute analysis of the economy and the market can help a trader make judgements with regards to the direction the index is likely to move in.
Many brokers offering CFDs in the EURO STOXX 50 do not charge commission, but take their costs from the difference in the spread – the prices at which the CFD can be bought and sold at. The tighter the spread, the lower the costs for the trader.
Plus500 offer CFD trading on the EURO STOXX 50 Index Futures fund or the iShares EU50 ETF. Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909) and offer their CFDs without commission. The spread on the EURO STOXX 50 CFD is €2 per unit or 0.06%, with an initial margin of 0.67% and a maintenance margin of 0.33%. Leverage for the product of is available at 1:150.
The London Capital Group (LCG) offer a minimum spread of 1.6 on the EU Stocks CFD (which is available in the UK only – elsewhere LCG offer forex trading on the index). The minimum trade size is 0.1 lot with the value of 1 lot or pip being €10. A margin requirement of 0.20% is required with a guaranteed stop charge of 4, and overnight financing is charged at +/- 2.5%.
For example, the minimum requirements for a buy trade on the EU Stocks CFD provided by LCG would be €6.91 (3454.7*0.1*10*0.20% = €6.91).
*All information collected from LCG as at 21 July 2017. Please refer to the LCG website for full terms and conditions.
The trading platforms offered by LCG offer access to a wide range of other markets and financial instruments, and as the company is fully regulated by the Financial Conduct Authority (FCA), clients can be confident that the company are subject to stringent operational and client money standards.
In conclusion, the EURO STOXX 50 is an established index representing the top blue chip companies in the Eurozone, and covering all sectors. For traders wishing to use leverage to increase their exposure to the index, CFDs are an appropriate product. It is, however, important to note that leverage can also magnify losses. FCA regulated brokers, such as LCG offer CFDs for a range of different indexes and other financial instruments.
IG scored best in our review of the top brokers for trading the euro 50, which takes into account 120+ factors across eight categories. Here are some areas where IG scored highly in:
IG offers four ways to tradeForex, CFDs, Spread Betting, Share dealing. If you wanted to trade EURO50
The two most important categories in our rating system are the cost of trading and the broker’s trust score. To calculate a broker’s trust score, we take into account a range of factors, including their regulation history, years in business, liquidity provider etc.
IG have a AAA trust score. This is largely down to them being regulated by Financial Conduct Authority and ASIC, segregating client funds, being segregating client funds, being established for over 44
Want to see how IG stacks up against Forex.com? We’ve compared their spreads, features, and key information below.
|GBP/USD Spread||0.9||0.9||DAX Spread||1.0||250.0|
|FTSE 100 Spread||1.0||150.0|
|Platform||MT4, Mac, Web Trader, L2 Dealer, Tablet & Mobile apps||MT4, Web Trader, NinjaTrader, Tablet & Mobile apps|
|Services||Forex, CFDs, Spread Betting, Share dealing||Forex|
|Base currency options||USD, GBP, EUR, CHF, JPY, SGD, AUD||USD, GBP, EUR|
|Funding options||Payoneer, Credit cards, Bank transfer, PayPal, MasterCard, BPAY, DebitCard,||Bank transfer, Cheque, DebitCard,|
Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.