What is the Nikkei 225 and how can you trade in it?

The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 72% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Another way of getting exposure is trading individual Nikkei stocks, such as car manufacturers Toyota and Nissan or electronics producers Sony and Panasonic. With CFDs, you’ll buy or sell contracts to exchange the price difference of the Japan 225 between the opening and closing position. Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth. The Nikkei consists of 225 top companies that trade on the Tokyo Stock Exchange, many of which are global brands.

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TOPIX, on the other hand, uses the capitalization-weighted method for all the stocks in the TSE’s first section. TOPIX is affected by stocks with large market valuations, such as financials. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority. You can trade ETFs with CFDs, but this offers lower liquidity and larger spreads than trading the Japan 225 directly. Please ensure you fully understand the risks and take care to manage your exposure. The Japanese stock market is open between 9am to 3pm JST – Monday to Friday.

The United Kingdom, France, Germany, Switzerland, Italy, and Singapore also offer ETFs that track the Nikkei 225, some of which are cross-listed on the Tokyo Stock Exchange. They include Blackrock Japan’s iShares Nikkei 225 ETF, Nomura Asset Management’s Nikkei 225 Exchange Traded Fund, and Daiwa Asset Management’s Daiwa ETF Nikkei 225. The index continued to fall during that entire year, hitting a low of 8,160.01 on Nov. 25.

Like the Dow Jones Industrial Average, the Nikkei 225 Stock Average is a price-weighted equity index. The ranking of companies is determined by stock price, which differs from other major indexes where market capitalization is used in calculations. First and foremost, tracking the performance of more than 3,500 companies would be a logistical nightmare, especially when one considers the amount of trading that occurs on a daily basis. However, and perhaps more importantly, the vast majority of the Japanese stock marketplace is dominate by the companies sat at the very top of the market capitalization rankings. Launched back in 1950, the Tokyo Stock Exchange is the largest stock exchange in Japan, and the fourth largest in the world by market capitalization.

Discover the range of markets and learn how they work – with IG Academy’s online course. Since the Nikkei index follows the Japanese economy closely, you can monitor the economic and political climate of the country to predict how the index will move. As a money expert, Kalpana is a regular guest on TV and radio – appearances include BBC One’s Morning Live, ITV’s Eat Well, Save Well, Sky News and more. Please bear with us as we address this and restore your personalized lists. So now that you know how the Nikkei 225 has performed over the past 30 years, in the next section of our guide we are going to show you how you can make an investment. Before the economic downturn came to fruition,  in 1989 the Nikkei peaked at 38,916 points.

With us, you will use CFDs to buy or sell contracts to exchange the price difference of the Japan 225 between the opening and closing position. Stay on top of upcoming market-moving events with our customisable economic calendar. The only way to trade on the Nikkei 225 price directly with us is through our Japan 225 index.

What is the Nikkei 225 and how can you trade in it?

Someone on our team will connect you with a financial professional in our network holding review cycle analytics for traders the correct designation and expertise. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. A weaker Yen generally boosts the Nikkei because it makes Japanese exports more competitive, thereby improving the earnings prospects of Japanese multinational companies.

Constituent Stocks

• One of the most popular ways to invest in the performance of the Nikkei 225 is to utilize the services of an index fund.
• The value of shares, ETFs and ETCs bought through an IG share trading account can fall as well as rise, which could mean getting back less than you originally put in.
• This means that companies with higher stock prices have a more significant influence on the index’s value, regardless of their total market capitalization.

The index fund will most commonly replicate the performance of the Nikkei 225 by actually purchasing the underlying shares of the companies that make the index. As noted above, this would be a complex task for an individual investor to perform independently, however institutions have the required framework to do this. One of the most popular ways to invest in the performance of the Nikkei 225 is to utilize the services of an tradeview forex index fund.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. The Nikkei Index, or Nikkei 225, uses a unique calculation methodology to determine its value. As a price-weighted index, it primarily considers the stock prices of its component companies, as opposed to market capitalization. To ensure that the companies included in the index are easily traded, they must demonstrate a certain level of liquidity.

Recent fears of a US recession caused Japan’s stock market crash which saw the Nikkei sink by 12% at the start of August. You would essentially need to purchase 225 individual stocks, which would not only be expensive, but highly complicated. As such, you would instead by best utilizing either an index fund or exchange traded fund (ETF). The Nikkei is a price-weighted index, meaning it’s calculated based on the stock prices of its component companies. The total value of the index is the sum of the stock prices of all 225 companies, adjusted by a divisor for stock splits and other corporate actions.

Provision of index data

While the above figures do make nervous reading, it is important to remember that investing is all about timing. For those not familiar with the Yen, that amounts to GBP£270 billion or US$357 billion. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications. Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. Our goal is to deliver the most understandable and comprehensive explanations of financial topics using simple writing complemented by helpful graphics and animation videos.

The Nikkei average has deviated sharply from the textbook model of stock averages, which grow at a steady exponential rate. For example, you can take a position on the Nikkei index based on the direction that the Japanese yen moves. Since the yen and the Nikkei index have an inverse relationship, when the currency appreciates in value, the Nikkei price will take a hit. The index consists of around 35 sectors, with tech being the largest, making up almost 50%. Other industries successfully outsource software development include financials, consumer goods, material, capital goods, transportation and utilities.