While it has just pushed back its 20-year high, the CAC 40 has the wind in its sails. But before investing in the main French stock market index, you need to understand how it works. To do this, here are some tips from ActuFinance, the portal that gives you the keys to the stock market.
Before starting, we suggest you some reminders about the CAC 40... Created in 1987, this index includes the 40 most important stocks on the Paris Stock Exchange, which makes it a true mirror of the health of the French economy, as well as its vitality on the international level. It is now one of the most powerful indices in Europe, behind the British FTSE 100 and the German DAX 30.
By its nature, it is impossible to trade directly on the CAC 40. This is because it is a stock market index. Its mission is to reflect the state of the market, to give information to investors, but it is not tradable as is. Rest assured, there are still ways to invest in the CAC 40 indirectly.
Choosing the right stockbroker for your needs
The first step in investing in the CAC 40 index is to choose a broker. To put it simply, this is an essential intermediary to get you started in the financial markets.
Before choosing a broker, you should know that there are three main criteria to take into account:
- The fees charged by the platform
- The security of the platform
- The range of products available (shares, forex...)
How to invest in the CAC 40?
If the CAC 40 is not tradable in itself, there are several ways to bet indirectly on this mirror of the French economy.
The first is to trade the CAC 40 via CFDs (Contract For Difference). Offered by all brokers, these instruments allow you to speculate on the rise or fall of the index. The special thing about CFDs is that you don't own shares, so you don't get any dividends. But the advantage of CFDs is that they offer the opportunity to gain exposure to the 40 most powerful companies in France through a single investment. In addition, for experienced traders, they allow you to benefit from leverage.
The second way to invest in the CAC 40 is to buy the shares of the companies that make it up. This is a more laborious solution, but it does have some advantages. In particular, it allows you to bet different amounts on the CAC 40 behemoths, in order to modulate your investment according to the economic outlook. But above all, it allows you to own the shares, and therefore to receive dividends.
Key moments to trade the CAC40 index
Volatile by definition, the CAC 40 is particularly interesting at certain times of the day. Depending on your profile, here are the best times to make profits:
- At the opening: for traders looking for maximum volatility, the CAC 40 is most prolific at the opening, i.e. around 9am.
- At the opening of the US markets: from 3:30 pm onwards, the opening of the US markets also causes movement and volatility in the CAC 40.
- Before the opening or after the closing of the CAC 40: for those who want to avoid volatility, the best is to trade outside the opening hours of the CAC 40, or even in the middle of the day.
How to follow the CAC 40 live?
There are several tools to follow the CAC 40 live, starting with the Google search tool. But a few specialized sites, such as eToro or Tradingview, offer a multitude of tools for those who want to analyze its price in detail.
Charts are good, but investing in the stock market also requires a diligent follow-up of the economic news. For this, it is recommended to regularly consult the latest information on specialized websites. On Actufinance, you will find a page that summarizes everything you need to know before investing in the CAC40. You will discover how it works in detail, the list of companies that make up the CAC40, but also its history and the factors that most influence its price.
Thanks to all this advice, the CAC 40 should no longer hold any secrets for you!