Indices are tools traders use to measure the performance of a stock market or a specific sector within it. By tracking how an index moves over time, traders can see whether the market is bullish or bearish and make decisions accordingly. They can also, at times, indicate the overall health of the economy, particularly if they are tracking the largest companies in a country.

There are dozens of indices, but not all are equally useful for Japanese stock traders. To learn more, read below. Alternatively, you can sign up to start trading indices with Saxo Bank.

The Nikkei 225 Stock Average

The Nikkei 225 Stock Average is perhaps the most well-known index in Japan. It’s a price-weighted index that tracks the225 largest companies listed on the Tokyo Stock Exchange. The Nikkei is a good gauge of the overall health of the Japanese economy and stock market, and many trade CFDs of this index when they want to participate in the Asian markets.

The Topix Index

The Topix Index is another broad-based index that tracks all first-section stocks on the Tokyo Stock Exchange. That means it covers about 1,700 companies, making it a more comprehensive measure of the Japanese Stock Exchange (TSE) than the Nikkei 225.

The Mothers Index

The Mothers Index is a small-cap index that tracks stocks of companies that are not listed on the first section of the Tokyo Stock Exchange. These are typically smaller, more volatile companies. The Mothers Index can be an excellent way to gain exposure to these firms.

The Jasdaq Index

The Jasdaq Index is similar to the Mothers Index, but tracks companies’ stocks listed on the Tokyo Stock Exchange’s second section. These companies are typically even smaller and more volatile than those in the Mothers Index, selected based on market capitalization, trading value, and net profits and dividends.

The Nikkei 400

The Nikkei 400 is a new index launched in 2014. It tracks the 400 largest companies on the Tokyo Stock Exchange, selected based on factors such as return on equity and market capitalization. The Nikkei 400 is a more sophisticated and comprehensive version of the Nikkei 225, and it promotes Japanese corporations both domestically and abroad.

The MSCI Japan Index

The MSCI Japan Index is an international index that tracks large- and mid-cap Japanese stocks. It’s a popular index for foreign investors seeking exposure to the Japanese stock market. They can be bought in the form of ETFs, which is the most common form, and investors can keep track of these Japanese equities all at once.

The Japan Government Bond Index

The Japan Government Bond Index tracks the performance of Japanese government bonds denominated in the Japanese Yen. It’s an essential index for traders interested in the fixed income market. It tracks a broad array of asset classes, including sub-indices that are available in any combination of maturity and rating.

The Bank of Japan Balance Sheet Index

The Bank of Japan Balance Sheet Index is a measure of the size of the balance sheet of the Bank of Japan. The index has been growing steadily since the bank started its quantitative easing program in 2013, making it an important indicator for traders to watch.

The Japanese Yen Index

The Japanese Yen Index tracks the performance of the Japanese yen against a basket of four other currencies: the US dollar, the Euro, the Australian dollar, and the New Zealand dollar. It’s an essential index for currency traders interested in the Japanese Yen, and it is a highly liquid index due to the frequency of the currencies traded.

The Nikkei Stock Average Volatility Index

The Nikkei Stock Average Volatility Index measures volatility in the Nikkei 225. It’s a helpful tool for traders looking to hedge their portfolios or take advantage of market swings.

How do these indices assist stock traders?

Indices provide essential information about the market

Indices are vital to any stock trader’s arsenal, providing essential information about the market. By tracking an index, traders can see whether the market is bullish or bearish and make decisions accordingly.

Indices measure performance

In addition to supplying vital information about the market, indices can also be used to measure performance. By tracking how an index moves over time, traders can get a good sense of how well (or poorly) a particular stock market is performing.

Indices find trading opportunities

By tracking an index, traders can also identify potential trading opportunities. For example, if a particular index is moving higher, traders might look for undervalued stocks relative to the index. Conversely, if an index is moving lower, traders might look for overvalued stocks relative to the index.

Indices track sector performance

Indices can also be used to track sector performance. By tracking the performance of an index, traders can get a good sense of how well (or poorly) a particular sector is doing. This information can be valuable when making investment decisions.

Indices track global market trends

Finally, indices can be used to track global market trends. By tracking an index, traders can get a good sense of how the overall market is doing. This information can be valuable when making investment decisions.