Indices are financial derivatives. They are calculated as a weighted average of share prices of top-performing companies listed on the exchange. An index is made up of a group of shares and is used to track the performance of a country’s economy, a market sector, or an exchange. It is just a way of measuring the value of a certain group of stocks. So, imagine that you choose a bunch of companies and calculate the average of their shares price.
The most-traded indices include the Dow Jones Industrial Average, S&P 500, FTSE, DAX, ASX200, NASDAQ, CAC, and Nikkei 225.
Since indices are just a number, they can’t be traded directly. You need a financial instrument like CFDs to trade indices.
The amount of money made or lost on trade depends on the size of your position and the market movement.
Every company shares price may have a different weight on the calculated average. It means that big companies may have a bigger influence on the index value, than small companies.
Trading indices online is a great way to speculate on the world’s top financial markets and keep abreast of the top stock markets.