Most of us here are trading trough a retail broker using CFDs. Nowadays brokers, from most respected to bucket shop ones, offers CFD on almost everything. For the most, CFD are contract that are traded 24h/5 just like Forex.
So, it shouldn't be a surprise going to your platform and open a chart of SP500 CFD, it should surprise you tough the fact that you can buy/sell at any time just like Forex hours. SP500 is a weighted index of us stocks prices, us stock prices trade only a few hours a day... So for the other hours what prices is the CFD representing? How can be the CFD open for trading if the underlying is closed? Where does prices and fluctuation come from? Fluctuations can't come from the broker clients because then someone with enough money, not that much actually, could easily move the entire market at will when the underlying is closed: brokers are smart and wont allow that.
Having a chat with the support team of a respected broker you may learn that they use a model that takes into account other factors such as: fluctuations of other correlated instruments, economic news and so on. So basically, they create a market in order for you to trade when the underlying is closed... what a gentle souls are these brokers!
What if these models run also when the underlying is open? What if these models run also on Forex? Is the aim of the model to replicate accurately the underlying? How do you replicate a closed underlying? (replicating non-existent data??) Is the model doing your interests, interests of the broker or is it completely impartial? Do you need to beat the market, the model, or both? Maybe this one of the reasons why most people loose instead of being at BE (according to pseudo-normally distributed market theory)?
So, it shouldn't be a surprise going to your platform and open a chart of SP500 CFD, it should surprise you tough the fact that you can buy/sell at any time just like Forex hours. SP500 is a weighted index of us stocks prices, us stock prices trade only a few hours a day... So for the other hours what prices is the CFD representing? How can be the CFD open for trading if the underlying is closed? Where does prices and fluctuation come from? Fluctuations can't come from the broker clients because then someone with enough money, not that much actually, could easily move the entire market at will when the underlying is closed: brokers are smart and wont allow that.
Having a chat with the support team of a respected broker you may learn that they use a model that takes into account other factors such as: fluctuations of other correlated instruments, economic news and so on. So basically, they create a market in order for you to trade when the underlying is closed... what a gentle souls are these brokers!
What if these models run also when the underlying is open? What if these models run also on Forex? Is the aim of the model to replicate accurately the underlying? How do you replicate a closed underlying? (replicating non-existent data??) Is the model doing your interests, interests of the broker or is it completely impartial? Do you need to beat the market, the model, or both? Maybe this one of the reasons why most people loose instead of being at BE (according to pseudo-normally distributed market theory)?