Good morning.
The indices (indexes???) (never quite sure which word to use but always seem to use 'indices') is a term that is 'loosely' used to refer to a whole RANGE of different instruments. An index is made up of underlying stocks. The S&P 500 for example is an 'average' of the prices of the stocks of 500 companies listed on the NYSE, the Dow is made of 30 stocks of 'blue chip' companies listed on the NYSE. Same with the Nasdaq 100 i.e. consists of the stocks of 100 companies listed on the NYSE etc. Each of these companies fall into different sectors and each sector has a different 'weighting' on the index and as such on the price movement of the index e.g. the S&P 500 is financial and banking stocks 'heavy' while the Nasdaq 100 is tech stocks 'heavy' etc. Price movement in the underlying stocks causes movement in the associated index. While this may seem 'daunting' at first it is not I can assure you. As far as you being able to lose MORE money than you put in it would depend which options you are trading and on the broker you are trading with and a variety of other factors. Suffice to say that for people like you and me and the brokers that we are able to trade with due to our limited resources this cannot and will not happen i.e. same as forex. The stuff you've heard about concerns the 'big time' players and while whatever you have heard is probably quite true it is not a concern for people like you and me. As far as not being able to get out of a trade again: not a concern for people like you and I. Having said that be aware that certain commodities are subject to 'limit' moves e.g. the price of Soybeans can only move a certain amount during a session and if it tried to move MORE than the 'limit' then trading in one direction or the other would be halted until the next day. This is to stop 'frantic' buying and selling in those markets (sort of like a 'cooling off period') and HUGE price swings. This means, for example, that let's say the price of Soybeans was going down BIG TIME during a session and the price moved the 'limit' early on during the session (moved down in this example). You would at that point ONLY be able to go long or buy Soybeans and would not be able to go short or sell until the next day (session). Problem: if you were ALREADY long you would not be able to realise your loss and close out your position until the next day and if the price continued to move down there is nothing you can do about it. After one of the 'crashes' (I forget which one) a type of 'limit' was introduced on the Dow etc. (I think it was called the 20% or 25% rule or something like that i.e. I forget now but you can look it up on the Internet). The idea was that you could not place orders MORE than 20% or 25% below the closing price of the day before (or something like that). This was to stop 'panick' selling and thus avoid another 'crash'. While I MAY not be too clear on the 'ins and outs' of this 'rule' suffice to say that it has been subsequently 'done away with' so it's not something that you have to worry about (at least not on the Dow, Nasdaq, and S&P 500)!!! The reason that I (ME) would recommend that you start with the Dow (futures) is because it is 'manageable' i.e. each single point movement on the Dow (futures) is $1 (mini lot at GCI which will cost you $50 of margin). There is unbelievable intra day movement (volatility) and you can make some good money while not 'losing your shirt'. The value of a pip ('tick' actually i.e. 'pip' only refers to forex) movement on commodities can be WAY more than $1 and with a $50 lot at 200:1 leverage on Soybeans this CAN result in a loss of $500 in a matter of minutes i.e. whole account 'wiped out' in a heartbeat. See the point? I suppose that trading one mini lot of the Dow is the 'equities equivalent' of trading one mini lot of EUR/USD in forex. I hope this clears things up for you somewhat.
The best thing that you can do for yourself is open a demo CFD account at GCI Financial and then you will be able to get an idea of how the different indices and commodites 'move'. DO NOT be fooled by the demo however. The prices will be the same as the live accounts BUT order execution is NOT e.g. orders on the Dow, S&P 500, and Nasdaq are executed in realtime on the LIVE accounts i.e. no dealing desk and the SAME on the DEMO account BUT orders on Soybeans are executed in realtime on the DEMO account BUT the LIVE account orders for Soybeans go through the dealing desk so sometimes you may wait a minute or two for a Soybeans order to be executed on the LIVE account and you will nearly always be requoted. Nothing to worry about i.e. THIS IS A NORMAL MARKET (this 'business' of people getting upset when they are requoted is nonsense i.e. that is how the REAL market works).
There is ONE thing I need to make quite clear here to you and everybody else: I am makiing this 'deal' to allow people to open accounts with $500 minimum at GCI (given enough clients) BUT this DOES NOT mean that it's a good idea i.e. I believe that at GCI their $2K minimum is a good thing. It's REAL easy to wipe out $500 with 200:1 leverage at GCI I can assure you. My recommendation for anybody with less than $2K (and a minimum of $500) would be to rather open an account with Delta and trade micro lots until you've built up AT LEAST the $2K. Unfortuanately this exlcudes you from being able to trade the futures and commodities although you can trade Gold and Silver and Oil (and the 'proper' or 'main' Dow IF you can afford $700 per lot)!!!
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