How to trade indices in South Africa

Step-by-step guide on how to trade indices 

Now that we’ve covered some of the basics of indices trading, let’s look at how to trade indices in South Africa.

Step 1 – Register with a regulated broker

Always trade with a licensed broker to safeguard your investment. Regulated brokers need to comply with strict standards, including transparency, client fund protection, and operational oversight. This reduces fraud risk and ensures accountability.

You can usually find regulatory details about your broker under their website’s footer. To verify this information, you can verify that their license is active on the respective regulator’s website. Exness ZA (Pty) Ltd. is authorized and regulated by the Financial Sector Conduct Authority (FSCA), which means South African clients are protected under local financial authorities.

Step 2 – Select an index to trade

The next step is choosing an index to open your position. Options will typically include major indices like the US30 (Dow Jones) and UK100 (FTSE 100). You should always research the individual constituents listed in the index to make informed trading decisions. If you want to learn how to trade indices before making a deposit, you can practice on a risk-free demo account.

Step 3 – Use a demo account to practice

A demo account will let you trade indices with virtual funds and zero risk. We recommend using demo accounts to practice strategy and familiarize yourself with the platform, charting with indicators, and the different instruments available.

Step 4 – Making a deposit and opening your first trade

When you’re ready to switch to real money, you can set your budget, make a deposit, and start trading. Start with small amounts and observe your trades until close. After closing a trade, consider what you did right or wrong, and if there’s anything different you can improve next time.

Indices trading strategies for beginners

A key aspect of learning how to trade indices is understanding some basic strategies and how to implement them. A trading strategy won’t guarantee results, but can help you build consistency and reduce unnecessary trades and risks.

Momentum and trend-following

Index traders will often use momentum and trend-following strategies when trading indices. The idea is to buy into a trade when the price is moving in one direction and hold as long as the trend continues.

Typically, trends will continue long enough for traders to capitalize on the movement, provided they act quickly and make use of take profit and stop loss orders. However, financial markets are volatile, and there is no guarantee that a trend will continue or for how long. Furthermore, knowing when to spot a true trend and predicting whether it will continue or not is a skill that can take time to learn.

To identify trend formation and potential reversals, traders typically use support and resistance levels, which indicate a low point and a high point in a given timeframe. If the price breaks above resistance or below support, it could indicate a new trend, and this is the point where experienced traders will act.

Trading on economic events and news

Similar to all other financial markets, indices react to news, political shifts, economic releases, and central bank decisions. These external factors can move prices fast and create sudden index upswings and downswings–also known as bullish and bearish markets.

In early 2025, for instance, US indices plunged following the announcement of major trade tariffs. The markets remained bearish for some time until tariffs were either removed or reduced, and the markets responded with consistent improvements.

Other factors that can impact indices and their performance include changes in interest rates, political instability, and increasing global tensions. If an event impacts the workforce or profitability of a company—such as lockdowns and central bank announcements, as well as anything that restricts supply chains, such as blocked ports/straits and closed borders—it can severely impact index prices.

Risk management and stop loss use

Once you know how to trade indices, the next step is to learn how to protect your capital from market volatility. There are a few risk management strategies that can help:

• Start small: Begin with a demo account and transition to small real money trades when ready. Keep your risk low, and never risk more than you can afford to lose.
• Be careful with leverage: Leverage may increase your returns on successful trades, but it can also increase exposure and risk. Use leverage with caution as a beginner trader.
• Limit your exposure: When you're just starting out, avoid trading too many indices at once or opening several trades. Stick with one or two indices, monitor your trades closely, and try to analyze the reasons behind the price action. It’s important not to overwhelm yourself, especially at an early stage.
• Use stop loss and take profit orders: These tools automatically close trades at a pre-defined level of your choosing. Stop loss orders limit your downside, while take profit orders can secure gains before the market changes direction.
• Keep learning: The more you learn about how to trade indices, including the strategies you can use and the factors that influence prices, the better prepared you will be. For more information, refer to our analytical tools and economic calendar.
A UK100 (FTSE 100) trade in the Exness Terminal with stop loss and take profit orders applied.