Is it worth investing in the Euro Stoxx 50 index: current quotes and prospects for Europe

A currency index is a value showing the ratio of the value of a currency (for which the index is calculated) to a basket consisting of several major world currencies. In calculations, as a rule, five or six major currencies are used, which may include:

1. U.S. dollar
2. Euro
3. British pound
4. Japanese yen
5. Canadian dollar
6. Swiss frank
7. Swedish krona

When calculating, each currency is taken into account with a coefficient showing its weight in the basket. This weight, in turn, depends on the share occupied by each country representing a particular currency in the foreign trade turnover of the country for whose currency the index is calculated.

What is Euro Stoxx 50?

You can buy shares, or you can buy entire indices. These, of course, are not exactly shares, but their “virtual” representation – a “squeeze” from the totality of securities of the companies included in it, calculated using a special formula.

The Euro Stoxx 50 Index includes 50 large European companies, most of which are growing dynamically and have good economic performance. These companies are not static participants; their composition is reviewed once a year, in the fall.

For convenience, it is traded in five currencies - euro, US dollar, Canadian dollar, pound sterling and Japanese yen.

Other amounts

The table of ready-made euro to ruble conversions contains frequently used sums of money for transferring between the € ₽ pair.

Which companies are included in Euro Stoxx?

Currently represented by the largest enterprises in eight countries - Germany, the Netherlands, France, Belgium, Spain, Ireland, Italy and Finland.

It consists mostly of companies from the industrial sector of the economy, among which the automotive industry is also represented - Daimler, BMW. However, there are also manufacturers of high-tech devices - Nokia Oyj, Siemens, Philips. Not without financial giants such as Deutsche Bank.

The largest share is occupied by Intesa, Santander, Enel, ING Groep, BBVA.

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Trends in EUR RUB

• LONG-TERM TRENDS by currency pair EUR RUB, which last for years, usually tracked on timeframes Weekly and Monthly. As a rule, trend reversal patterns begin and end these movements (these are classic patterns such as triple and double tops or bottoms, spike patterns, etc.). Within upward or downward movements, classic trend continuation patterns are also tracked - flag, pennant, gap (Gaps), or wedge, etc.)

  

• MEDIUM-term trends are usually tracked on the Daily, H4 timeframes. Here you can clearly see the price movement relative to the MF levels: a real or false breakout of the level or a rebound from the level.

Index history

Euro Stoxx 50 dates back to 1998, when the German company Deutsche Boerse Group decided to launch its own index on the market. At that time, it included only oil and gas industry enterprises – the so-called “blue chips”.

Its value is calculated by the organization Stocks Ltd., which is owned by the corporation that created the Euro Stoxx 50.

It is traded on the Frankfurt Stock Exchange. Trading hours are from 9.00 to 18.00 (weekdays) Central European Time.

Types of Stoxx 50

Over time, the Euro Stoxx 50 Index has been split into several sub-divisions to provide greater transparency. Among them are Euro Stoxx SubIndeх for the countries of Spain, Italy and France, Stoxx Europe 50 (securities of the 18 largest corporations) and Stoxx Europe 600.

They do not influence the market as much as their parent, but they also play their role on the stock exchange.

Cost and dynamics for all time

Since its introduction to the market, the Euro Stoxx 50 index has firmly taken its place among attractive assets with high returns. It began the movement in 1998 with explosive growth, reaching an all-time high of 5522 in March 2000. This was followed by an equally sharp decline and it recorded a low of 1847 in March 2003 (it fell again in March 2009 and bottomed at 1765).

After a series of ups and downs until mid-2015, the indicator again showed more or less stable growth, reaching a peak of 3836 in April of the same year.

Currently it is trading horizontally with a downward bias: since the beginning of the year it has fallen by more than 200 points (6%).

Dynamics of the cost of 50 euros in rubles per month

According to the Central Bank of the Russian Federation, over the past month the euro exchange rate in rubles increased by 0.51 ₽ (fifty-one kopecks). 30 days ago, the exchange rate of 50.00 euros to rubles was 4,522.34 ₽ (four thousand five hundred twenty-two rubles thirty-four kopecks). Over the past week, the exchange price of 50.00 euros has fallen by 2.44 RUB and today is 4,497.73 RUB (four thousand four hundred ninety-seven rubles seventy-three kopecks).

Euro Stoxx 50 calculation method

This indicator is calculated using the Laspeyres method. The calculation includes the main indicators of the current economic activity of the participating companies, as well as dividends paid and the number of shares outstanding.

Previously, it was calculated once a day at the close of the exchange, but now, due to the high volatility of the markets and thanks to limitless technical capabilities, it is calculated every 15 seconds.

Pros and cons of the index

As usual, let's look at the main pros and cons of this method of investing.

The advantages will be:

• High liquidity of the instrument.
• Most of the companies in its composition are enterprises from Germany and France, European countries with stable economies.
• Includes many organizations in the industrial sector, which is considered to be growing.
• More resistant to falling compared to shares of individual companies.

The main disadvantages include the following:

• We are highly dependent on American currency quotes.
• A serious deterioration in the performance (stock prices) of even one enterprise from its composition often entails a fall in the entire index.
• Subject to influence of political events in the Eurozone.

Which indicators are best suited for analyzing and forecasting the EUR RUB exchange rate?

The EUR RUB exchange rate, like other currency pairs, such as USD RUB, GBP USD, USD CHF or AUD USD, moves according to MF levels - the levels of accumulations of market maker orders. Such levels are given daily on the closed forum of the Masterforex-V Academy.

Along with the MF levels, Academy traders use proprietary indicators developed at the Masterforex-V Academy: these are AO_Zotik (instead of the classic Bill Williams AO) and WPR_VSMARK.

The chart shows only 4 instruments out of more than 30 that are taught at the Masterforex-V Academy, but you can already see how much easier it has become to understand every movement of a currency pair in the Forex market.

How and where to make money on the index

They work with indices either through speculation (trading) or through investing in various funds that create virtual copies of it. Instruments for speculation are futures or options. To invest, you must purchase shares in the relevant funds (for example, SPDR Stoxx Europe 50 ETF, iShares EURO STOXX 50 ETF or Stoxx Europe 600 health care ETF).

But the use of a CFD instrument (a contract concluded for future exchange rate differences) for this asset is extremely undesirable. CFD has nothing to do with investment at all, it is a purely speculative instrument. By purchasing it, you will not receive rights to shares. In addition, it is poorly regulated by the state, which is why it is very popular among Forex companies.

If you want my opinion, a real investor is not a trader. The investor is committed to long-term, reliable capital growth, and is not attracted by short-term earnings with overwhelming risk.

As for the question of how long to hold this asset, there is no clear answer. Everything will depend on your goals and strategy for achieving them. In general, investing in an index is a long-term instrument with a planning horizon of three years.

Since the supplier of Euro Stoxx 50 was and remains the Frankfurt Stock Exchange, it can be traded in the following ways:

• Through a subsidiary of a Russian broker, registered in the eurozone or the USA.
• Through a foreign broker providing access to trading on this exchange.

It is better to choose TWS from trading platforms.

Rick Keith Opening CapTrader Exante

The oldest Russian broker, operating since 1994. An excellent choice for those who want to connect to autofollow. Pros:

• no annoying calls with offers to spend money;
• own trading platform;
• impressive results of strategies (+74% for 2021) that you can connect to.

Of the minuses:

• no Quik.

You can read the full review here.

A good broker for a beginner. Here I hold the Russian part of the investment portfolio from an ETF from FinEx on an IIS.

The broker pleases:

• low commissions and the absence of annoying calls with offers to spend my money.

Of the minuses:

• weak personal account and inconvenient system for annual key regeneration.

The review can be read here.

Another great broker with whom I worked for more than 2 years. This is where I traded on FORTS.

Pros:

1. Reasonable commissions
2. Excellent personal account
3. Nice free services

The downside is the broker's love of calling people trying to sell something.

The review can be viewed here.

German IB introducing broker for direct access to foreign markets. This is where my investment portfolio is located.

Pros:

1. Works with Russians
2. Availability of a Russian-language version of the site
3. Reasonable commissions
4. No inactivity fee
5. Insurance under US law for $500k

The disadvantages include:

• Support exclusively in English and German
• The support service itself is poor

For a detailed review, see this post.

Another interesting broker for going abroad, and not from the IB family. Unfortunately, contracts are opened for Russians only in Cyprus.

Pros:

1. Acceptable commissions
2. The fact of successful verification of work by the SEC
3. Russian-language website and support

On the downside:

• Cyprus jurisdiction
• Inactivity fee

Read a detailed review here. You can get a $500 bonus when opening an account here.

Warning about questionable ways to make money on Stoxx 50

I think it would be useful to once again warn about the dominance of “forex kitchens” and organizations that invite you to trade binary options. Forex is a currency exchange and has nothing to do with the stock market. In addition, you can count the truly licensed brokers on one hand, but I don’t even want to talk about “kitchens”, everything has already been said hundreds of times.

As for the so-called earnings on binary options, there is no point in saying anything here at all, because this type of “trading” cannot be called anything other than fraud. Regular casinos masquerading as service providers in the financial market.

I hope for the prudence and wisdom of my readers and believe that they will not join the ranks of deceived “binary specialists”.