What are Indices

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What are INDICES ?

An index follows a specific market, sector, asset-class, concept or a combination of all or some of these to provide a unique, measurable number to investors. This number helps to trace and summarize movements for that selected combination.

Investors should note that indices are highly customized offerings and are based on complex calculation mechanisms. Indices can also be traded through other financial products such as Futures, Options, ETFs, etc., which adds another layer of complexity to trading index products.

It is important to understand the underlying computation, identify the dependencies and consider extreme case scenarios before making any choices or investment decisions.

Risk warning: FX and CFD trading involves a high risk of loss. T&C’s apply

Indices Trading | What are Indices | STP Trusted Broker

S&P Dow Jones Indices (S&PDJI) – Indexing


S&P Dow Jones Indices, a joint venture of McGraw-Hill Financial and CME Group, offer more than 830,000 Indices, which can span across asset classes such as commodity, currency, fixed-income, futures, options, private equity and other alternative asset classes. The most popular are the S&P 500 and the Dow Jones Industrial Average (DJIA).

An index enables tracking of the performance of selected concepts/categories and associated financial products and serves as a benchmark for comparative performance measures of various investments. Indexes can range from being very broad based to extremely specific.

The plain vanilla Equity based Indices are the biggest lot among S&P Dow Jones Index offerings. Mostly targeted at a particular market, country or region, a further categorization is available by number of stocks included, large-medium-small cap, sector (blue chip, banking, aerospace) or concept (Sharia, Thematic).

What are some ADVANTAGES of Trading Indices?

Some common/popular indices have a high traded daily volume, offering Index traders very high liquidity along with diversification and stock-specific risk mitigation.

Investors get to select what and how they trade, including trading on leverage/margin.

Long & short selling is available on index-based products.

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority (62.3%) of retail investor accounts lose money when trading 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.