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What are Indices?

Read more about indices trading, how to trade on an index and discover a range of tips and strategies.

Indices, or indexes as they are also known, are assets which are grouped together; either representing 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; this means that shifts in individual stock prices lead to the index rising or falling in value.

Major Financial Indices

Major Financial Indices

Most major economies (and indeed, many developing ones) have at least one financial index which groups 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
major indices image

Different stock exchanges focus on different types of stocks. Some indices are specifically global (such as the S&P Global 100) whilst others are national, listing only companies which are native to the country in question. Other indices focus only on specific business sectors – the NASDAQ index, for example, only lists tech stocks.

However, there are some multinational corporations which are tradable on more than one index; usually both a national index and an international one. Alibaba.com, for example, 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. Similarly, 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, meaning that 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 date.

Trading Indices with ETX Capital

Trading Indices with ETX Capital

Of course, it’s possible to trade individual stocks (see our equities section for more details) 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. It’s essentially a way to trade the bigger picture in the financial markets.

ETX Capital offers a wide variety of different indices for clients to trade, with 20 different indices available on the ETX TraderPro platform and multiple options on the company’s MT4 platform as well. If you already have an account with ETX Capital sign in to trade right now. If you’d like to open an account with ETX Capital, click here to complete our quick and easy sign-up process.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.