The Nikkei 225 is the leading and most-respected index of Japanese stocks. It is a price-weighted index composed of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange. Some big global brands, like Nissan, Panasonic and Canon, all trade on this stock exchange and form part of the Nikkei 225.
PrimeXBT is a cutting-edge online trading platform offering traders all the tools necessary to trade in the Nikkei 225 market.
Margin trading is a well known and popular way for traders to make trades on the Nikkei 225, as well as other indices and markets, and involves using less personal capital for a trade and rather borrowing from PrimeXBT to magnify potential profits.
Margin trading means you do not have to deposit the full amount of the position you want open and rather you borrow these funds to leverage the position. If the trade is successful, the profits are also magnified, but if your trade on the Nikkei 225 goes the wrong way, your losses can also be greater.
For example, If a trader takes a long position of $2,000 on the Nikkei 225 and it rises by 10%, using 5x leverage the same rise becomes a 50% profit, or $1,000. A similar spot trade without leverage would result in only 10% profit, or $200.
Disclaimer: Margin trading also comes with inherent risks if the position moves against the trade. You should never utilize 100% leverage and never invest more than you can afford to lose.
The Nikkei 225 is Japan’s pre-eminent stock index, and tracks the top 225 most respected and valuable companies that are listed on the Tokyo Stock Exchange. The Nikkei 225 is compiled and maintained by Nihon Keizai Shimbun.
The Nikkei 225 comprises securities from a wide range of sectors including foods, automotive, manufacturing, chemicals, fishery, construction, mining, pharmaceuticals, retail, real estate, machinery, securities and insurance.
The Nikkei 225 was launched on September 7, 1950, and until the Japanese economic bubble throughout the 1980’s it progressed in a relatively normal manner. However, in the 80’s Japan’s economy ballooned so that stock prices and land values tripled from 1985 to 1989, with the Tokyo Stock Exchange accounting for 60% of global market cap.
Unlike other stock averages which typically grow at a steady exponential rate, the Nikkei reached its peak all time high on December 29, 1989, wherefrom then on afterwards it spent the next 20 years retracing back to just about 7,000 points in March 2009.
The Nikkei 225 is composed of firms from all sectors of the Japanese economy, including major Japanese auto brands like Mitsubishi, Honda, Nissan and Suzuki, and major Japanese camera companies such as Nikon and Olympus.
Being that the Nikkei 225 is made up of such a large number of companies, the coverage of this index includes a minimum of half a dozen of the leading Japanese companies and institutions in any one sector.
|Company||Index Weighting (%)|
|Fast Retailing Co., Ltd.||10.84|
|Softbank Group Corp.||3.86|
|Tokyo Electron Ltd.||3.38|
|Daikin Industries Ltd.||2.37|
|Shin-Etsu Chemical Co., Ltd.||1.91|
|Familymart Co., Ltd.||1.82|
The Tokyo Stock Exchange is one of the largest and most well-known stock exchanges in the world, and investing into Nikkei 225 derivatives provides access to Japan’s top 225 companies with a single instrument.
Although today Japan’s premier index has not recovered to its original peak from the 80’s and 90’s, the Nikkei 225 has reliably provided returns for traders over the past 3 years, and is regarded as one of the leading stock averages in Asia today.
The Nikkei 225 is a price-weighted index. What this means is that the composition of the index is calculated and decided based upon the price of each security in comparison to the prices of all of the other securities in the index.
For example, if two stocks trade on the Tokyo Stock Exchange and are included in the Nikkei 225, and the first stock trades at a current price of $5, while the second stock trades at a current price of $50, the second stock will make up 10 times more of the total index compared to the first stock.
The Nikkei 225 is a stock index rather than a single company stock which means that the growth of the index is pushed along by over a hundred companies. For traders, this means the risk is mitigated as one company’s poor performance won’t impact the index too much, and when there is a growth in macroeconomic factors, most of the top companies will benefit together
PrimeXBT’s ultra-fast order execution and its stable, reliable trading engine ensures the tightest spreads and best trading experience. The trading platform is packed with advanced trading tools, such as long and short positions, advanced order types such as stop loss and take profit orders.
The platform is also safe, secure, and offers 24/7 customer support service via a live chat, community channels, and much more.
It’s free to open an account, and there is no obligation to
fund or trade.