How to trade the Taiwan Index

How can you trade the TAIEX?

You can trade the Taiwan Capitalization Weighted Stock Index (TAIEX) via our Taiwan Index, which tracks the price of the underlying.

You can:

1. Trade the Taiwan Index price directly
2. Trade TAIEX-related ETFs
3. Trade TAIEX-listed shares

Trade TAIEX-related ETFs

• Get broad exposure to the TAIEX with our linked ETFs
• Take a position on the price movements of TAIEX-linked ETFs without owning them, using CFDs
• Go long or short on ETF prices, but remember that this offers lower liquidity and higher spreads than trading the Taiwan Index itself via CFDs
• Trade on the price of the TAIEX-related ETF, calculated using the fund’s net asset value (NAV)

Overnight funding fees are charged on cash index, share and ETF positions held open after 10pm UK time (international times may vary). These fees are not charged on futures and options.¹

How to start trading the Taiwan Index

1. Open a CFD trading account
2. Learn what moves the Taiwan Index’s price
3. Hone your Taiwan Index trading strategy
4. Take your first trading position

Open a CFD trading account

Using our platform, you can trade the Taiwan Index with a CFD trading account.

With CFDs, you'll trade on leverage without having to own any actual shares. Instead, you’ll put down a deposit to open a larger position, with profits and losses calculated on the full position size. Leverage means both profit and loss will still be magnified to value of the full trade – so you could gain or lose money faster than you’d expect. Remeber to take steps to manage your risk.

When trading CFDs you can:

• Predict the price of stocks, ETFs and index prices rising or falling
• Leverage your exposure – you’ll only pay a deposit to get exposure to the full position size
• Take shorter-term positions
• Look to hedge your portfolio when trading
• Trade without owning the underlying asset

Because you don’t own the underlying asset, you won’t have any shareholder privileges.

Learn what moves the Taiwan Index’s price

• Economic events – China’s political and economic climate plays a big role in influencing the Taiwan Index’s price movements, as key stocks can be impacted by moderate to significant changes
• News – any global events generally have an impact on the price of an index, for example the 2019 pandemic
• Earnings reports – when constituents of the TAIEX release their earnings reports, it’s important to keep an eye on big changes to each company’s market cap. If a company has significant weight in the Taiwan Index, it can sway the index’s price
• Interest rate decisions – short-term volatility caused by interest rate decisions by major central banks can affect the Taiwan Index’s price
• Currency rates and fluctuations – the strength of currencies like TWD and RMB often have a direct impact on the performance of the companies within the Taiwan Index, as its constituents do business with countries around the world

Hone your Taiwan Index trading strategy

Follow these tips when creating your Taiwan Index trading strategy:

• Pick a trading style: decide how you want to trade the index based on your risk appetite and how much time you have. Read about the four trading styles suited to different types of traders
• Look at charts and price action: use HS50 price charts to help you determine market sentiment. It’s important to know how to use charts when trading
• Make use of technical analysis and indicators: see how technical analysis and trading indicators can help you to identify chart patterns, trading signals and trends in the markets
• Set trading alerts: set criteria for your trades and get notified when they’re met. This gives you an opportunity to act faster when you think the market price may move in a certain direction

Take your first Taiwan Index trading position

A contract for difference (CFD) is an agreement to exchange the difference in price of an underlying asset from the time it’s opened to when it’s closed.

So, however much the price of that asset has risen or dropped since you opened your position is what you stand to make as a profit or a loss.

You can trade Taiwan Index CFDs in a variety of ways.

• Cash indices: trade on the current price of the underlying market (the index) and get tighter spreads. This is popular among those with a short-term view
• Index futures: agree to trade the index at a predetermined price on a date in future. This is often preferred by those with a longer-term view
• Options: buy the right (but not the obligation) to trade the underlying at a predetermined price in future. Options are generally suited to more experienced traders with a long-term view
• ETFs: get exposure to a basket of TAIEX stocks, on the spot or using forwards, in a single position
• Shares: predict TAIEX-listed shares’ prices rising or falling without owning them

Here’s an example of how CFD trading works. Let’s say you think that the Taiwan Index price is going to rise from its current price of 14,500. You buy 10 CFD contracts on our index worth $5 per contract. If your prediction is correct, and you close your position when the sell price is 14,590. The difference is 90 points, multiplied by the $5 per contract multiplied by 10 contracts, so your profit is $4500 – excluding other costs.

If your prediction is incorrect and the market drops, and you closed your trade at a level of 14,450, your loss would be $2500 – excluding other costs.