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The Nikkei is the major and most famous index of Japanese stocks. It consists of the top 225 blue-chip companies traded on the Tokyo Stock Exchange such as Sony, Canon, Toyota, Nissan, and Honda. The term ‘blue-chip’ is used for describing a company that has a large market capitalization, an impeccable reputation, and many years of success. The Nikkei is often compared with the Dow Jones Industrial Average (DJIA) Index in the United States. Check out JP255 (Nikkei 225) live chart!
The Nikkei 225 is a price-weighted index. It implies that the index is an average of the share prices of all the companies included. The Nikkei 225 "Stock Average Fact Sheet" says the JP225 index is calculated every 5 seconds while the Tokyo Stock Exchange is open.
Indexes are one of the safest and low-risk assets in the financial market. Why is that? Well, every index is a well-diversified portfolio itself. If one company of index loses its value, other growing companies will offset the fall and the total index price won’t drop as much as it can and may even rise despite some falling stocks of the index!
You can trade contracts for difference on the Nikkei 225. These contracts reflect the JP225 movement. It allows you to trade in both directions. In other words, you can open both buy and sell orders while trading.
Also, you can use leverage. It means that with only a small amount of deposit you can control much bigger financial positions. Always remember that leverage allows you to multiply your account. On the downside, you may lose a considerable part of it if the market goes against your trades.
The Nikkei is driven by earnings reports, news, and new product launches of listed companies. Besides, the Japanese economic factors such as interest rates, monetary policy, and economic indicators can impact the index as they may change the consumer appetite for products and the overall market sentiment.