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What Is EURO STOXX 50?

The EURO STOXX 50 Index is used to measure the current situation in the European economy. The calculation of this index takes into account 50 large companies in Europe. The selected companies are called "blue-chip", meaning they are well-established and financially sound. Similar to the Dow Jones 30 in the United States, it gives traders and investors information on the current trading opportunities.

What Is EURO STOXX 50?

The EURO STOXX 50 shows the share price performance of 50 companies with the highest capitalization. They account for 60% of the total cap in Europe, which is the majority of publicly available shares that are regularly traded. The companies cover 19 supersectors in 11 Eurozone countries.

STOXX Limited is a company that calculates stock indices. Indices they calculate are often used as financial instruments underlying financial products. Additionally, they are used to gauge risk.

Understanding EURO STOXX 50 Companies

The constituents within the Euro STOXX 50 composition are stable, yet dynamically developing companies. Therefore, the list of companies is reviewed annually in September for any changes. The table below demonstrates a part of the up-to-date index composition.

As has been said before, there are 19 supersectors as defined by the Industry Classification Benchmark (ICB). Companies are categorized depending on their primary source of revenue. Stocks are ranked based on the free-float market capitalization for each of the supersector. The largest stocks make the final selection list.

Factors Influencing the Euro STOXX 50 Index Price

The Euro STOXX 50 index is influenced by quite a lot of factors, both internal and external. These factors can cause the price to rise or fall, so any trader should keep an eye on them. It is mainly affected by:

- The economic indicators of the selected companies.
- Political and economic events in the Eurozone.
- Recent events with the Euro exchange rate movement.
- Monetary policy in the United States and other major market participants.

Advantages and Disadvantages of Euro STOXX 50

Working with Euro STOXX 50 can be a way even to increase your capital. The following factors increase your chances of profits:

- It is comprised of stocks with the highest liquidity and trading volume in European markets.
- Most of the companies in its composition are German and French enterprises, which are characterized by a stable economy.
- Includes many organizations within the industrial sector, which correspond to the most rapidly growing ones.
- It is more resistant to price drops compared to the stocks of individual companies.
- On the other hand, the index is not without its flaws.
- The index is affected by political events in the Eurozone.
- Severe performance deterioration (stock quotes) in even one enterprise in its composition often affects the entire index.
- Heavily dependent on currency rates.


The Euro STOXX 50 CFD (Contract for Difference) operations are operated through speculation or by investing. Like any stock market index, it allows you to opt for different CFD strategies offered by your trading platform of choice.

What Is CFD Trading?

CFDs deal with differences in prices of various underlying assets that are traded in financial markets. The contract helps you profit from differences between current asset value and its value at the end of the contract. Bear in mind that it does not imply ownership of the underlying asset itself.

Before CFDs, you needed a large capital to trade on international trading exchanges since the associated fees were extremely high. CFDs opened access to exchange-traded instruments to more people with different funds.

Advantages and Disadvantages of CFD EURO STOXX 50

When discussing CFD Euro STOXX 50 trading, it is worth highlighting what makes it more profitable and effective in comparison with some other assets. The advantages of this method include:

- By working with the EURO 50 index CFDs, you get to expand your portfolio to the European market (if allowed by local regulations).
- You can trade in either direction, choosing between short and long positions. You make a profit both from growth and fall in prices.
- You reduce your financial risks from future price changes.

Before giving preference to CFDs, each trader should also consider the negative aspects associated with this route. The main drawback is often the high spreads, which reduce income and increase losses.

Also, this type of trading makes it impossible to own the asset and receive dividends. However, it is not a big obstacle as the majority of market participants are more likely to obtain speculative profit rather than own the asset.

EURO STOXX 50 CFD Trading Strategies

The Euro STOXX 50, as well as its constituents, are listed on the Frankfurt Stock Exchange. If you reside outside of Europe, you can work with this instrument in one of the following ways:

- Through a local broker registered in the eurozone or the USA.
- Through a foreign broker providing access to trade on this exchange.

The Euro STOXX 50 is often used for speculative trading and geopolitical investing since it’s a critical assessment of Europe’s market. Therefore, to speculate on changes in Europe’s economic situation, traders use:

- Bullish strategy – It is applicable at times when stock prices within the index have recently reached a peak and reversed. Remember to use stop loss to mitigate the risks.
- Bearish strategy – Use this strategy if the index price is relatively low, but the market news is favorable. The strategy fits long-tern as well as short-term trading.


The Euro STOXX 50 is one of the key indexes for the European Union stock market. Its calculation includes the main indicators of the current economic activity of the 50 selected largest companies. If you use this powerful indicator correctly, you can make good profits from changes in its dynamics.

The success of investing depends on the correct understanding of the asset you are working on and your predictions. But if you want to back your knowledge with practice, register a free Demo account on Libertex. Improve your skills and push yourself to become a better trader without risking real money.
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Everything About Nikkei 225 – a Leading Japanese Stock Market Index

You may already know about the Dow Jones at the New York Stock Exchange or the FTSE at the London Stock Exchange. These indices are used to gauge the performance of a certain market sector and speculate on it rather than individual stocks. Similarly, the Nikkei 225 is an underlying index at the Tokyo Stock Exchange.

Nikkei Definition

Nikkei 225 is Japan’s most important index, which reflects business activity in the country. It contains 225 stocks from different companies traded on the Japanese Stock Exchange. The index itself displays the average arithmetic value of these stocks. It was introduced on September 7, 1950, meaning at that time, its value was published for the first time. It was named after a newspaper that calculated it.

There are different variations of the index: Nikkei 500, Nikkei Stock Index 300, and Nikkei All Stock Index. All of them display somewhat similar information, but the Nikkei 225 is still considered the leading, most widely used indicator.

The selection criteria are based on the price of the company’s stock rather than market capitalization, like in some other indices. Only the largest ones make it to the list of constituents. The higher-priced stocks have the largest influence on the index.

Understanding the Meaning of Nikkei

The Nikkei 225 consists of stocks selected from top-performing blue-chip companies based in Japan. The main criteria for being selected are the price of the stock, liquidity, and sector balance. Also, the stock must be listed on the Tokyo Stock Exchange First Section.

The composition of the Nikkei 225 is subject to an annual reexamination – a Periodic Review. This takes place in October, where every company is checked to determine whether it fits the criteria. And the process of changing the list of constituents is called an Extraordinary Replacement.

It is calculated based on the value of the 225 most liquid stocks of the Tokyo Stock Exchange. The formula was developed by the American company Dow Jones & Co., which differs from their European counterparts.

Factors Influencing the Nikkei 225 Index Price

It is commonly known that Nikkei 225 is extremely sensitive to not only local news and events but also those events occurring around the world. Traders who work with the Nikkei index should closely monitor:

- Japan’s macroeconomic indicators: inflation, deflation, unemployment rate, the number of new jobs, etc.
- Financial prosperity of individual companies included in the index
- The overall situation in foreign stock markets, but especially movement in the US market. If the Dow Jones index rises, Nikkei will react in a similar way
- World events, natural disasters, wars, political instability, and economic news The tight connection between the Japanese and American markets, particularly their main indexes, is attributed to Japan’s exports to the USA. Therefore, you should keep an eye on the dynamics of the S&P 500 and the Dollar Index as well as other US indicators.

Advantages and Disadvantages of Nikkei 225

The Nikkei 225 has specific differences that make it stand out from indices like FTSE or DAX. When contemplating whether you should invest in this instrument, keep in mind the following benefits:

- The simplicity of being a price-weighted index
- Ease of tracking the overall health of the economy
- Fixed spread
- Long trading hours
- Less risk than capitalization-weighted indexes

There is no financial instrument that is flawless and carries zero risks. In this context, here are some considerations regarding the Nikkei index:

- Significant effect of small firm stock changes
- No attention to the size of the industry sector
- Vulnerability to sudden drops in the bear market

What is Nikkei 225 CFD Trading

The Nikkei 225 remains the most widely quoted average in Japan because of good trading opportunities. However, the Nikkei index is not directly tradeable. Instead, there is a convenient option to trade this index using CFDs (contract for difference).

What is CFD Trading

CFD trading is based on price differences rather than acquiring the asset. The main goal is to gain speculative profits from the differences in underlying assets’ prices. CFDs are an easy and convenient way to invest in the securities market in either direction. Depending on what behavior you expect from the market, you will be able to adjust your strategy accordingly.

Advantages and Disadvantages of CFD Nikkei 225

Those familiar with CFD, in more detail, recognize the many positive aspects of this tool. In many cases, it proves to be more profitable and convenient than trading the underlying asset itself. The benefits include:

- You can significantly increase your initial capital with leverage
- Work with both rising and falling market
- Ability to trade international markets from one account
- Opportunity to hedge an existing shares portfolio
- The flexibility of timeframes and contract sizes

Novice traders who want to try trading CFDs should not forget that such trading still has certain risks:

- Losses associated with excessively large leverage
- Over-trading because of low capital requirements
- No rights as a shareholder

FTSE Nikkei 225 Trading Strategies

The Nikkei 225 has gained popularity among CFD traders due to its good volume and volatility. The index has earned a reputation of being the most volatile index due to sharp fluctuations in quotes. Analysts recommend that trading on the Nikkei Index be done by experienced and active traders. At the very least, you should feel prepared for different outcomes.

The index is usually growth-oriented. Sharp drops in value only occur during massive crises, that is, every five to 10 years. Once a year, you can expect it to sink by 10-15%. When trading in a bearish market, stay cautious, and always set up a stop-loss. All the other times, when the market is going up, stick to a bullish strategy. Setting a stop-loss is less crucial but still advisable.


Nikkei 225 Index is a leading stock price index in Japan. If you are looking for an investment tool to diversify your risks, it will be a suitable choice. The Japanese economy is still on the rise, and this directly affects the performance of the index.

With all this information in mind, it's time to use it to your advantage. Register for a free demo account on Libertex and try out your skills in trading any financial instrument. Real practice can only occur in a live market environment. You will familiarize yourself with the technical aspect of our platforms and become equipped to be able to make a good profit.


Full What Is Interest Rate Guide for Forex Trader

The interest rate was introduced as a tool that allows you to get paid for submitting your funds for other parties’ usage. Interest rates were introduced in Ancient Greece and sometimes were represented as natural goods, not money. For example, those who took grain had to return more grain.

In any case, throughout the years, the interest rate was assumed to be something negative, so banks and lending organizations, as we know them now, became widespread and completely legal in the recent past. Today, taking out a loan is quite easy, and almost everyone has taken out a loan, at least once, so it is important to know more about the essence of the interest rate, as well as the different types.

What Is Interest Rate?

The interest rate can be called payment for receiving a loan. When you take out a loan, you need to return the total loan amount, plus interest rate, which is derived from the amount owed. For example, if you take a $100 loan and a 7% interest rate, you need to return the $100 principal and $7 in interest.

When Are Interest Rates Applied?

The interest rate is applied when you lend assets - fiat, crypto, etc. No matter whether you are an individual or act as an entity, the interest rate can be applied when you borrow funds. The interest rate can rise or decrease - it all depends on the terms of the loan.

How Is The Interest Rate Calculated?

There are different types of interest rates, and thus each type is calculated differently. Regardless of what interest rate amount is applied, it can always be represented in an equation. We will disclose below how to calculate simple and compound interest rates.

How to Calculate Simple Interest Rate

A simple interest rate is a basic type of interest rate. It considers that you need to repay a principal plus interest only. For example, when you take out a $100 loan, with a simple interest rate of 5% applied, you need to repay $105 in total.

However, usually, when you take out a loan, there is a specified term for which the interest rate is applied and payment periods. Usually, the interest rate is applied per annum, and the payment period is applied on a monthly basis. Thus, if you take $100 for three years, and a simple interest rate makes 5% per annum, you have to repay:

$100*(5%*3+100%) = $115

We take $100 as principal, multiply 3 by 5% as there are three years for the loan usage with a 5% interest rate per annum.

Your monthly payment will be:

$115/36= $3.19

We take the whole sum to repay, which totals $115, and divide it by the number of months in 3 years, which equals 36. Thus, you need to pay $3.19 if you take out a loan under the terms described above.

How to Calculate Compound Interest Rate

Compound interest is much more complicated than simple interest. An applied compound interest rate means that you pay interest on the principal, plus interest on the interest for the past time periods. In plain words, that means that if you take $100 for three years, with a 5% compound interest rate per annum, you will be charged by $5 interest for the first year, $5.25 for the second year, and $5.51 for the third year. The full interest amount will total $15.76, and the whole sum you need to repay will equal $115.75 ($100 of principal plus $15.76 in interest).

The compound interest you need to repay can be calculated using this formula:

CI=P*(1+IR)^n-P; CI - compound interest P - principal IR - interest rate

When you compare a simple and compound interest rate, it’s obvious that the second option is worse for the borrower if the same rate is applied. For example, we have provided the difference only equals $0.76 ($15,75-$15). However, if you take out a loan for a long period of time, like 20 years, the difference becomes much more significant.

Which Types of Interest Rates Are There?

Along with the simple and compound interest rates, there are other types of interest rates one should know about:

- fixed
- variable
- amortized
- prime
- discount

Fixed Interest Rates

A fixed interest rate considers that it won’t change no matter how the interest rate changes on the market. For example, if at the moment you take the loan at a 7%vinterest rate, with a medium interest rate on the market of 7%, it remains unchanged no matter what.

Most lenders prefer this type of rate because it allows you to plan your payments precisely. The main advantage of this kind of rate is stability. However, there are issues with it, as well. For example, your interest rate cannot be decreased if the interest rate on the market falls. On the other hand, it cannot rise if the interest rate on the market rises.

Variable Interest Rates

A variable interest rate means that the interest rate for the loan can change, and its size depends on the prescribed conditions. For now, in the US, the variable interest rate usually changes along with changes in the Cost of Savings Index. The good thing about this type of interest rate is that it can decrease. However, the bad thing is that it can increase as well, and thus you may have issues with repaying the loan. Generally, it is an antipode of the fixed interest rate.

Amortized Interest Rate

An amortized interest rate is about charging the principal remaining with the interest rate applied. Thus, an amortized interest rate considers that you pay more interest at the beginning of the loan period and less principal. As time passes, you pay less interest and more principal.

Prime Interest Rate

This kind of interest rate is usually applied to large institutions like banks or corporations. The prime interest rate is usually lower than the general interest rate and is only enforced for trustworthy parties.

Discount Interest Rate

A discount interest rate is applied for short term loans. It is calculated on the basis of the risks, borrower’s cash flow, and other temporary factors.

Comparison Rate for Decision-Making

When you have a choice of alternatives to choose from when taking a loan, your best helper in this decision making is the comparison rate. It is used to figure out the loan cost deriving the interest and all other costs that will be charged when you take the loan. For example, if the interest is 7%, while in the meantime, the fees and charges applied for this loan make 0.3%, the comparison rate will equal 7.3%. This indicator allows you to get a clear understanding of your true costs for loan repayment.

Thus, when you have several offers to take out a loan from, consider not only the interest rate but the comparison rate as well. Let’s take an example:

- One bank offers you a loan with an interest rate of 6%. Along with that, you are charged for loan insurance by 0.2% and a service fee of 0.6%.
- Another bank offers you a loan with an interest rate of 6.5%. There are no additional fees applied.

As you can see, although the first bank offers you a loan for 6%, your comparison rate will make 6.8%. Although the second bank offers a greater interest rate for the loan, it is still going to be a more profitable solution to take out a loan there as 6.8% is more than 6.5%.

What Is The APR

APR is the annual percentage rate. The annual percentage rate is a coefficient of the rate which is charged per annum. The APR is the basic and most widespread indicator used to evaluate the cost of the loan. Considering the APR is vital for decision-making purposes.

What Is the Difference Between Interest Rate and APR

There is actually no difference between the interest rate and APR. Actually, APR is one of the characteristics of the interest rate. As we already know, APR is the annual percentage rate, which means that it is the charge for the loan per annum. The interest rate is a figure that shows the charge for using the loan. Usually, when someone points out the interest rate, the period for which it is applied, is also underlined. For example, what we call interest rate can be applied per quarter or on a monthly basis. Though usually interest rate is applied per annum, so in the majority of cases, the interest rate equals the APR.

Let’s take an example. You take out a loan with an interest rate of 4% per quarter applied. If it is a simple interest rate, then you can say that the APR for this loan equals 16% as there are four quarters in a year.

Interest Rates and the Forex Market

Interest rates play a large role in the economics and financial markets, including Forex. The increase of interest rate usually considers that the economy has slowed down, while a decrease in the interest rate usually means that the economy is moving faster.

Depending on the assets and tools Forex traders deal with, there can be different effects upon a change of interest rate, on the global markets. An inadequate interest rate, no matter whether it is too low or too high, will cause instability and crises on the market, which should be considered by the Forex trader when one figures out a strategy.

How Do Interest Rates Affect Currencies?

The higher the interest rate, the higher the inflation will be. If you compare prices 20 years ago and today, it will be obvious that they have increased dramatically. That is all tied to inflation, so $10 today and $10 in the 1990s is a lot different.

If the central bank of a specified country has increased an interest rate, this will lead to the growth of inflation of the currency, and in the long or even short term, this factor will cause a falling trend for the specified currency.

Thus, for a trader, it will be valuable to have practice dealing with this factor. Track the changes in the currency price on the Forex after the release of news related to a change in interest rates.


Forex traders should be aware of interest rates, types of interest rates, policies of central banks, and other related subjects. The thing is, prediction of changes in interest rates in a given period can help a trader make better decisions.

Knowledge of interest rates on the mortgage or business loan markets and peculiarities of this subject will also be helpful. Considering the role interest rates play in the global economy and all of the industries, a trader who ignores this topic will be blind in one eye.

To figure out the best strategies for using information about interest rate changes in trading, use the Libertex trading platform. Here you can open a demo account and test various strategies to examine them for efficiency.

Consider registering an account and making demo orders upon receiving a change of interest rate news release. For example, try the EUR/JPY trading pair. Track the changes in interest rates of central banks and news related to this topic, and make orders (long or short) based on these changes. It is likely that, based on monitoring the interest rate, you will build a successful trading strategy on the Forex market.


Dollar in the spotlight ahead of crucial FED meeting

The world's reserve currency, the US dollar, has experienced sustained demand in recent weeks as uncertainty grows amid rising coronavirus cases and runaway inflation. Mounting price pressure has led to louder calls for the central bank to tighten its monetary policy, with the US Federal Reserve hinting at this possibility several times over the past couple of months. Though the greenback has been trading slightly subdued following a sell-off across shorter-duration Treasury bonds, the consensus is that the Fed will announce the long-awaited start of its stimulus tapering at the regulator's upcoming meeting on Wednesday. Such a firm move towards a more hawkish stance will likely buoy the dollar, prompting a rise in demand for US Treasury bonds that should help the US national currency strengthen against the other majors.

Bad news for the Fibre

The EUR/USD pair has been on a protracted downtrend for some time and seems to have moved into a consolidation phase around 1.1600 this week. However, a combination of inflation woes and Fed stimulus tightening is likely to drive the euro down to new local lows over the coming weeks. In fact, Commerzbank's Team Head FICC Technical Analysis Research, Karen Jones, expects the pair to challenge the recent low of 1.1522, to begin with, before slipping to 1.1366 thereafter.

Let's not forget that Europe and the single currency have their own unique problems right now. First, there's the ongoing energy crisis that has seen natural gas (and, by extension, electricity) prices rise several-fold in the space of a few months. Then, there's the nascent COVID wave that threatens to plunge several European countries back into lockdown. Looking at the technicals, EUR/USD has just failed a smidge ahead of the 55-day MA at 1.1694 and the 1.1696 five-month downtrend. This suggests a decline is due, especially considering the fundamentals we've already covered.

In light of this and other cyclical concerns, the Fibre looks a solid short at the moment. To protect against intensifying volatility, however, it may also be wise to consider a small gold allocation.

Sterling rues missed opportunities

Things are not quite as negative for the British pound, despite the island nation facing similar issues surrounding energy prices and inflation. Some supporting factors include the positive sentiment over the future of post-Brexit Britain and the extremely high vaccination rate of the population, making a fresh lockdown unlikely.

However, GBP/USD has already failed to capitalise on the mild bearish atmosphere around the dollar, continuing to slip lower as investors gear up for pivotal Bank of England (BoE) and the Federal Reserve policy meetings. If a rate hike is ultimately announced by the US regulator, it will put even more downward pressure on the Cable. This effect is only likely to be amplified by the continuing uncertainty over the Northern Ireland protocol, which makes sterling inherently less attractive to investors.

According to FX Strategists at UOB Group, GBP/USD could be heading for its local support of 1.3625 in the weeks ahead as capital flows out of risk assets into safe havens such as the US dollar and precious metals. Much will depend on the extent of the central bank tightening on both sides of the pond, but the downtrend can be expected to continue, so shorting the Cable or simply buying the US Dollar Index could be a smart move. Perhaps consider waiting until after Wednesday or at least have a tight Stop-Loss set.

Not much to separate USD /JPY

The domestic situation in Japan is relatively stable compared to the West. Japanese Prime Minister Kishida's Liberal Democratic Party has just easily retained its majority in parliament, and the country has no energy supply crisis to speak of. In the short term, the yen is down from its 8-day high of 114.44, but this is largely due to slumping US Treasury yields ahead of this critical Fed decision.

It's easy to forget that the greenback isn't actually doing that well at all in the grand scheme of things; it's just that its competitors in Europe and elsewhere in the world are faring much, much worse. The Japanese yen is an interesting case as — unlike the other majors — it's also considered a defensive currency. This means that any strengthening of the greenback in response to a more hawkish Fed policy will also be reflected in the yen. As such, any gains for the dollar will be effectively cancelled out or at least diminished.

Estimates for the pair would appear to corroborate this theory as no significant swing is expected over the long term. Trading Economics have USD/JPY trading at 114.48 by the end of this quarter, rising to 115.89 in 12 months. As we've seen, factors like central bank tightening and general global uncertainty mean the yen and USD are fairly correlated at present. While there isn't likely to be much upside on the yen that the US Dollar Index won't equal, it's always wise to diversify to mitigate any potential US-specific negative factors. It might be a good shout to keep half your dollar cash in yen just to be on the safe side.

Experience you can rely on

Libertex has been connecting investors and traders with financial markets since 1997, so you can rest easy knowing your money is in good hands. As a forex specialist, we offer both long and short positions in a wide range of major and minor pairs, including EUR/USD, GBP/USD, USD/JPY and many more. Libertex's extensive offering of over 150 instruments includes currency-related commodities, such as gold (XAU/USD) and silver, enabling you to hedge your positions against increased volatility. Our commission is among the lowest on the market, and our spreads are some of the tightest. Try our multi-award-winning app for yourself and benefit from in-app trading signals, technical analysis and price alerts, as well as easy-to-use, intuitive pending order and position management.


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