OMXS30 Index Trading
The OMXS30 is an index for 30 of the most actively traded shares on the Stockholm Stock Exchange. OMXS30 is considered Sweden’s leading benchmark stock index, with the limited number of constituents ensuring that the underlying stocks have excellent liquidity.
The index, owned by NASDAQ, was designed to accurately represent the broad performance of its constituents. NASDAQ Inc., the parent company, has granted Stockholm Stock Exchange the rights to utilise OMXS30 in the clearing of derivatives based on the index.
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OMXS30 was launched on the 30th of September 1986 with a base value of 500. But a 1:4 split was applied on the 27th of April 1998, which subsequently meant that the index’s base value was 125.
The index initially trended sideways but experienced wild swings between 1992 and 1994. A choppy period would come again before the turn of the millennium, pushing the index to a split-adjusted all-time high of circa 2400 in December 1997, followed by a heavy tumble to circa 600 by January 1998.
By the turn of the millennium, the index had recovered to above 1400 in February 2000, but a dip followed shortly after with the OMXS30 printing a low of below 500 by September 2002.
It turned higher afterwards, managing to top out above 1270 by May 2007, before the pressures of the global financial crisis dragged it to just above 600 by January 2009. The index has since recovered nicely, and as of November 2019, it was trading above 1700.
Why Trade OMXS30 Via CFDs?
Here are the advantages of trading the OMXS30 index via CFDs rather than through futures contracts:
- Low trading costs – AvaTrade does not charge any commissions when trading index CFDs. The only transaction cost is a price spread that can be as low as 0.01% of the entire trade position.
- Leverage – CFDs can be traded with margin. This means that you only need a small capital amount to control a larger position in the market.
- Go long or short – As an index with a choppy history, an OMXS30 CFD is attractive for investors since they can make money no matter the price trend direction of the asset.
Index Composition and Calculation
OMXS30 is a market-weighted price index. Market capitalisation and trading volumes determine inclusion into the index. The index is measured in points and is designed to track the overall performance of its 30 share constituents.
To be included in the index, the following is required:
- The share must be listed on the Stockholm Stock Exchange, and its price denominated in the Swedish krona (SEK).
- The share must be either ordinary public shares or depositary receipts. Other security types, such as convertible debentures, warrants, derivatives and private shares, are not eligible.
- The shares must have sufficient liquidity, which is not controlled by limited individuals.
The index value uses the Swedish krona as the presentation currency. A divisor is also applied to ensure any changes or events outside normal working hours do not affect the value of the index. For accuracy, the index is rounded off to 8 decimal places, but the index value is usually published to 2 decimal places for practical purposes.
The index is maintained by NASDAQ, which rebalances it semi-annually in June and December. The cut-off date for the relevant data for rebalancing is collected on the last trading days of May and November.
Below are the top 5 industry breakdown of the OMXS30:
|Industrials||37.30%||Sweden is home to multiple century-old industrial companies such as Alfa Laval and Atlas Copco.|
|Financials||21.97%||Sweden is a member of the G10 and ranked as one of the most open economies of the world, thanks to its financial sector.|
|Technology||10.83%||There are major tech companies listed on the Stockholm Stock Exchange, such as Hexagon and ABB.|
|Consumer Goods||9.43%||Major world consumer goods manufacturers, such as Swedish Match, Essity and H&M, are housed in Sweden.|
|Telecommunications||6.51%||Sweden’s telecoms sector is the most advanced in the expansive Nordic region, propelled by companies such as Telia, Tele2 and Ericsson.|
There are numerous ETFs based on the OMXS30, such as XACT OMXS30, XACT Bull, XACT Bear, XACT Bull 2 and XACT Bear 2. As well, there are other related indices in the OMX family for the Nordic region, such as the OMX Nordic 40, OMX Copenhagen 25, OMX Helsinki and OMX Iceland.
Factors Influencing the Overall Index Price of the OMXS30
With its relatively limited number of constituents, a significant change in the price of one share, could impact the overall price of the OMXS30. This also applies to any major changes in a particular sector or industry represented in the index.
Sweden is also an export-oriented economy, so factors such as trade talks or global economic conditions have an immense impact on the benchmark OMXS30 index. This is reflected in the choppy nature of the index value.
Why Trade the OMXS30?
- Liquidity – OMXS30 is made up of 30 of the most liquid and highly traded shares. This naturally makes the index a highly liquid asset, with almost guaranteed daily volatility.
- Fewer price shocks – The computational method of the OMXS30 applies a divisor to limit sudden price shocks in the index value.
- Diversification – By trading the OMXS30, you are exposed to virtually the biggest companies in the biggest sectors across the Nordic region.
- Vast news coverage – The OMXS30 is the leading index in the vital Nordic region. This means that it is one of the most watched, tracked and traded indices in the world. As such, OMXS30 receive vast news coverage, which makes it easily analysed, both technically and fundamentally.
Benefits of Trading OMXS30 CFDs with AvaTrade
As an award-winning, regulated broker, AvaTrade offers its clients a wide range of benefits when trading OMXS30 CFDs and many other assets including stocks, forex, cryptocurrencies and commodities. Here are some of the advantages of trading OMXS30 CFDs with AvaTrade:
- Globally multi-regulated forex trading broker with regulation in Ireland, British Virgin Islands, Australia, South Africa and Japan
- Robust desktop and mobile trading platforms; MT4 and MT5 are available as well as AvaOptions, Mac Trading and the AvaTradeGO app
- Trade OMXS30 with a leverage of up to
- An outstanding, multi-lingual responsive and professional customer support
- Comprehensive education centre with a wide choice of useful resources
- Safe, convenient and flexible payment methods for deposits and withdrawals
- Demo account available
Main OMX 30 FAQ
- What is the OMX 30?
The OMX 30 is the index that tracks the largest blue-chip stocks listed on the Stockholm Stock Exchange. As such it is considered a good measure of the strength of the Swedish and Nordic economies. It uses market-weighted capitalisation, and because it consists of just 30 stocks, it ensures excellent liquidity for the underlying companies. Some of the more well-known components include AstraZeneca, ABB, and Sandvik.
- How do I trade the OMX 30?
The best way to trade the OMX 30 is through CFDs or binary options. These derivative products keep trading costs low, provide excellent leverage to magnify positions, and allow traders to go either long or short when taking advantage of movements in the index. For traders who prefer ETFs to binaries or CFDs, there are also a large number of ETFs that attempt to mirror the returns from the OMX 30.
- What is the best OMX 30 trading strategy?
Because the OMX 30 is often range-bound a strategy that takes advantage of trading the tops and bottoms of a range can be best when attempting to trade the OMX 30. One straightforward way to do this is to trade based off of support and resistance levels. These can be determined manually, or by using Fibonacci ratios. Using the Relative Strength Index in conjunction with the support and resistance levels can produce a winning trading strategy.
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