Indices, or indexes as they are also known, are assets which are grouped together representing either a specific sector of a market or a market in its entirety. A stock market index’s overall level is calculated by taking into account the current prices of all the different assets within the index. Due to this shifts in individual stock prices lead to the index rising or falling in value.
Major Financial Indices
Most major economies (and indeed, many developing ones) have at least one financial index grouping together a series of assets. Major indices include:
- The S&P 500 and Dow Jones indices based in New York City
- The FTSE100 based in London
- The DAX30 based in Frankfurt
- The Hang Seng based in Hong Kong
- The Nikkei 225 based in Tokyo
- The Shanghai Composite
Different stock exchanges focus on different types of stocks. Some indices are specifically global (such as the S&P Global 100). Others are national, listing only companies which are native to the country in question. There are indices focusing only on specific business sectors – the NASDAQ index, for example, only lists tech stocks.
However, there are some multinational corporations tradable on more than one index, usually both a national index and an international one. For example, Alibaba.com can be traded both on Hong Kong’s Hang Seng index and – after a highly publicised IPO last year – the New York Stock Exchange as well; Credit Suisse can be traded both on the Zurich-based Swiss Market Index and the New York Stock Exchange. Some financial indices are tradable either in ‘Rolling Daily’ or ‘Futures’ formats - they can be traded either at their current price or at a price agreed on now for an option which will close automatically on a specific future date.
Trading Indices with MarketsTrades
It’s possible to trade individual stocks (for more details, see our equities section) but it’s also possible to trade an index as a single entity - buying if you think that the stocks on the index will rise in general or selling if you think that on average they will fall. In its nature, it’s a way to trade the bigger picture in the financial markets.
With 20 different indices available on the MarketsTrades platform and multiple options on the company’s MT5 platform, MarketsTrades offers a wide variety of different indices for clients to trade. If you already have an account with MarketsTrades, sign in to trade right now. If you’d like to open an account with MarketsTrades, click here to complete our quick and easy sign-up process.