What is the S&P 500?
The S&P 500 tracks 500 of the largest U.S. companies, covering about 80% of the total market value. It serves as a primary benchmark for the American stock market and includes giants like Apple, Alphabet, and NVIDIA.
Historical performance
The S&P 500 has shown a 10% average annual return since 1926, even though investors have experienced volatility like the 20% drop in 2022*. This volatility is partly driven by the Index's market-cap-weighting structure, where larger companies like Amazon or Microsoft drive price movements more than smaller ones. For any trader, this history is a reminder that while short-term dips are likely, the market horizon has historically been upward.
What moves S&P 500’s price?
When the S&P 500 shifts, it is usually because of a few key movers in its giant basket of 500 listed U.S. Stocks. The Index also reacts to earnings releases and economic data reports. Another influencer is the USD strength and sudden geopolitical events, which play a major role in driving volatility. Understanding these drivers helps traders keep informed of potential shifts.
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Why trade the S&P 500?
The "Basket of Fruit" Concept
Instead of buying one apple (a single stock), you get a whole basket containing small pieces of 500 different fruits.
- If one fruit goes bad, the rest of the basket can stay fresh.
- If the whole farm has a great season, the value of your entire basket goes up.
The S&P 500 is similar to that. You speculate on a piece of everything from Tech (Google) to Cars (Tesla) to Banking (Citigroup).
Why trade the S&P 500 with us?
- Fast and reliable order execution
- No commissions and tight spreads
- Advanced analytical tools
- Fast and secure withdrawals
Top industry awards
What makes it popular?
Diversity
Instant exposure across major U.S. Stocks.
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Security
Reviewed and updated by a standard committee.
Growth
Long-term average returns around ~10% per year.
"S&P" refers to Standard & Poor's, the firm behind the index, and "500" refers to the 500 constituent companies. The index is now maintained by S&P Dow Jones Indices.
How to get started
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Open an account
Practise risk-free demo
Trade for real
Trading the S&P 500 with Leverage
Leverage lets you open a larger position with a smaller deposit.
With Plus500, 1:20 leverage, means every $1 you deposit gives you exposure to $20 in the market.
Your Deposit
$4,200Market Exposure
$84,000Understanding S&P 500 risks
While every investment holds risk, the S&P 500 is known for its exposure across 500 U.S Stocks, making it popular to build wealth over time. One of its biggest risks is market volatility, which has historically driven its strong returns (averaging about 10% annually over the long run) but has also led to notable downturns. By staying invested through the S&P 500’s downtrends, you are gaining exposure to the overall growth of listed companies, even through their hardship.
The Index’s downtrends are also part of its strength. By focusing only on large, successful U.S. tech giants, you are choosing stability and quality over high-risk smaller companies. For traders, the S&P 500 provides exposure to an Index rather than individual stocks, where the committee automatically removes underperforming companies that do not meet the inclusion criteria and replaces them with new successful companies. However, because the Index is currently dominated by some big tech giants, it can drop if those specific companies have a bad year.
Exit strategy & risk management
Essential risk management tools are key to help protect gains and minimise losses. Let’s break them down:
Close at Profit
Helps you secure potential gains by closing a position once a specified profit level is reached.Close at Loss
Allows you to set a price at which your CFD position will automatically close in order to limit potential losses.Trailing Stop
Can be set at a specific distance from the current market price. It remains active as long as the price moves in your favour and the stop level “trails” along with the market price by the predefined specific distance.Guaranteed Stop
Helps ensure that your position will close at the exact price you set with no risk of Slippage due to market volatility or gapping.
These tools are critical so you can have a solid exit strategy in times of volatility.
Key takeaways
What it is
The S&P 500 tracks 500 of the largest U.S. companies. Its historical performance has a 10% average annual return. The Index’s price is driven by earnings, data reports, and USD strength.Why trade it
One trade gives broad exposure across many U.S Stocks. It's reviewed and updated by a committee regularly.The Pluses with us
Trade with fast order execution, tight spreads, advanced tools, and secure withdrawals.Ways to trade
Access via Index CFDs, Options CFDs, or ETF CFDs (e.g. SPY) and compare how all three are derivatives, behaving differently.How to get started
Open an account, try demo trading, and trade for real.Understanding the risks
One of its biggest risks is market volatility, which allows for its historically strong returns. Essential risk management tools are key to help protect gains and minimise losses.