Index
An index is a way to measure the performance of a group of assets, in this case a list of publicly traded companies and their stock prices.
One of the top performing and most widely known indices in the world is the Dow Jones. The Dow Jones Industrial Average (DJIA) tracks the overall performance of the 30 largest companies in the US. If the average price of the 30 companies goes up, the DJIA climbs higher as well. If the average price of the 30 companies drops lower, the DJIA will decline too.
indices
What is Index Trading
Indices are highly popular among traders. They first emerged in 1884, and have been in use ever since. Market Indices are a collection of stocks and instruments used to track the growth or trajectory of an industry or sector.
Index trading is defined as the buying and selling of a specific stock market index. Investors will speculate on the price of an index rising or falling which then determines whether they will be buying or selling. Since an index represents the performance of a group of stocks, you will not be buying any actual underlying stock, but rather buying the average performance of the group of stocks. When the price of shares for the companies within an index go up, the value of the index increases. If the price instead falls, the value of the index will drop.
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How To Trade Indices ?
One of the top performing and most widely known indices in the world is the Dow Jones. The Dow Jones Industrial Average (DJIA) tracks the overall performance of the 30 largest companies in the US. If the average price of the 30 companies goes up, the DJIA climbs higher as well. If the average price of the 30 companies drops lower, the DJIA will decline too.
When you trade indices online, there are two main types: index cash CFDs and index futures CFDs. The main difference between the ‘cash’ market and ‘futures’ market is that the ‘cash’ does not have an expiry date.
The ‘futures’ market, however, has an expiry date, normally known as a ‘rollover’. A futures contract is effectively an agreement between the buyer and the seller on the price that has to be paid by the buyer at a given future date
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