Indices, also called indexes, are assets which are grouped together; they represent 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 consideration the current prices of all the different assets within the index; this means that shifts in individual stock prices are bound to lead to the index rising or falling in value.
Most major economies (and also many developing ones) have at least one financial index which groups together a series of assets. Major indices include:
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. Others focus only on specific business sectors – the NASDAQ index, for example, only lists tech stocks.
However, some multinational corporations are tradable on more than one index; usually both a national and an international one. Alibaba.com, for example, can be traded both on Hong Kong’s Hang Seng index and – since 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, which is why they can be traded either at their current price or at a price agreed on for an option which will close automatically on a specific date.
It’s possible to trade individual stocks (see the equities section for more details) as well as 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 mainly a way to trade the bigger picture in the financial markets.
PremiumFrx offers a wide variety of different indices that our clients can trade, with 20 different indices available on the PremiumFrx platform and many more options on the company’s MT5 platform as well. If you already have an account with PremiumFrx, sign in to trade directly. If you’d like to open an account with PremiumFrx, click here to complete our quick and easy sign-up process.