NIKKEI225 Signals & Technical Analysis
About the Nikkei 225 (NKY)
The Nikkei 225 is a price-weighted stock index or a stock average of the top 225 blue chip stocks listed on the Tokyo Stock Exchange. The Nikkei can be compared with the Dow Jones Industrial Average Index of the United States.
The Nikkei Index is considered an essential measure of the Japanese stock market and the performance of the Japanese economy. Companies listed on the Nikkei Index include Sony Corporation, Canon Inc., Nissan Motor Corporation, Mazda Motor Corporation, and Panasonic Corporation.
The index comprises of companies from 36 different industries. As of 2013, the leading sectors were technology, consumer goods, financial services, transportation and utilities, capital goods/others, and materials.
In contrary to other stock market indices whose stocks are ordered by market capitalization, the stocks in the Nikkei Index are listed by share prices. Whereas the stock prices are denominated in Japanese Yen, and its segments are reconsidered once each year in September.
History of the Nikkei 225
The Nikkei derives its name from the Nihon Keizai Shimbun (Nikkei) newspaper which has been calculating the index daily since September 7, 1950. The index was calculated back retroactively to May 16, 1949.
The Nikkei was established back when Japan was industrialized and rebuilt after the Second World War.
Important Events in the History of the Nikkei 225
Between 1985 and 1990, there was a major asset bubble in the Japanese economy. During this time, stock prices and real estate values tripled. When the bubble burst, the Nikkei lost more than 33% of its value in less than a year.
This decline continued until October 2008 when the Nikkei had lost more than 80% of the value it had in December 1989, when it had established an extraordinary high.
After a long period of sideways consolidation which lasted for about 4 years, the Nikkei rebounded sharply, fueled by economic stimulus by the Bank of Japan and the Japanese government, and gained an impressive 150% between June 2012 and June 2015.
Back in September 2018, Nikkei posted a high of 24,460, up 1.3% from the previous day. The gains were supported by export-related stocks, amid the decline of the Yen against the dollar.
Nikkei 225 Contract Size
With many forex brokers, the minimum number of Nikkei contracts you can trade is 10. Some brokers have a maximum amount of contracts per trade, for example, 1000. You can usually only trade increments of 10 contracts.
The notional value of 10 Nikkei contracts is ten times the current price of the index. The current price is 19,680 Japanese Yen, so the notional value of 10 contracts is 196,800 Yen.
To calculate the notional value in US dollars, simply divide 196,800 by the current USD/JPY exchange rate of 111.280 to get an amount of $1768.51.
Underlying Index: Nikkei Stock Average (Nikkei 225) Opening Date: September 3, 1988 Tick Size: ¥10 (Value per tick: ¥10,000 per contract) Pip Value: One index point (1.0) is worth 1 Japanese Yen. Therefore, the pip value (or point value) of 10 Nikkei contracts is 10 Yen.