A stock market index tracks the combined price performance of selected stocks. It serves as a benchmark for a market, region, or sector.
Indices
What are Indices?
Indices are financial instruments designed to track the overall price performance of a basket of stocks. They use a statistical measure of change to reflect how the selected constituents are performing. Indices are popular with traders because they provide broad market exposure and built‑in diversification.
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Hours Global Coverage
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Major Benchmarks
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Constituents (S&P 500)
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Nasdaq Top 100
Definition & Role
What are Indices?
Use Case
Broad Exposure
Trade a market view without managing many individual positions.
Construction
How Are Indices Compiled?
An index is defined by its components and the rules that govern inclusion and weighting. Indices can be global, regional, national, or sector‑specific. Beyond equities, indices also exist for assets like REITs, bonds, commodities, and hedge funds — providing efficient exposure to targeted segments.
- Global: Constituents span multiple exchanges and economies.
- Regional/National: Focused exposure to a geography or economy.
- Sector: Tracks industries like Technology, Energy, Financials, or specific niches.
Methodologies
How Are Indices Calculated?
Benchmarks
Most Traded Indices
| Index | Country | Trading Hours (GMT) | Top 5 Sector Weights | Notable Constituents |
|---|---|---|---|---|
| S&P 500 | US | 22:00–20:59 | Technology 27%, Healthcare 14%, Financials 12%, Consumer Discretionary 11%, Industrials 9% | Apple, Amazon, Walmart, Meta, ExxonMobil |
| DJIA (Dow Jones Industrial Average) | US | 22:00–20:59 | Healthcare 20%, Financials 20%, Technology 17%, Industrials 14%, Consumer Discretionary 13% | Goldman Sachs, Home Depot, Visa, Microsoft, Caterpillar |
| Nasdaq 100 | US | 22:00–20:59 | Technology 52%, Consumer Services 24%, Health 15%, Consumer Goods 5%, Industrials 3% | Adobe, Tesla, Airbnb, Starbucks, Apple |
| FTSE 100 | UK | 00:00–19:59 | Consumer Staples 19%, Financials 17%, Energy 13%, Healthcare 12%, Materials 12% | Shell, Barclays, HSBC, AstraZeneca, British American Tobacco |
| DAX 40 | Germany | 00:15–19:59 | Industrials 23%, Financial Services 17%, Technology 14%, Consumer Goods 13%, Healthcare 10% | Siemens, Puma, Mercedes‑Benz, BMW, Airbus |
| Nikkei 225 | Japan | 23:30–06:24 and 06:55–20:44 | Consumer Discretionary 20%, Industrials 19%, Technology 19%, Healthcare 13%, Communications 11% | Sony, Nippon, Mitsubishi, SoftBank, Toyota |
Participation
What is Index Trading?
Index trading means speculating on whether an index will rise or fall. It offers exposure to a broad market view without managing multiple single‑stock positions. Traders often use ETFs, index funds, futures, or CFDs to implement their view.
- Benefits: Broad exposure, simplicity, and typically smoother price action than single stocks.
- Instruments: ETFs, futures, index funds, and CFDs for flexible implementation.
Derivatives
Index CFDs
Advantages of Index CFDs
- Leverage provides capital efficiency when used responsibly
- Bidirectional trading (long or short) to express a view
- No need to hold every underlying component
Risks & Considerations
- Volatility can amplify losses when using leverage
- Margin calls if equity falls below maintenance requirements
- Financing and spread costs affect profitability
Drivers
What Moves Index Prices?
Benefits
Why Trade Indices?
Access
Markets Exposure
Express macro views across economies and sectors.
Platform
Why Trade Indices with TradeFlix?
TradeFlix provides transparent pricing, reliable execution, and advanced platforms with risk tools and education — helping you access index markets with clarity and control.
FAQ
Index Trading FAQs
Common schemes include market‑cap, price‑weighted, and equal‑weighted methodologies. Many indices rebalance periodically to maintain their objectives.
Indices offer diversification, smoother price behavior, and a simple way to express a broad market view.
ETFs and futures for traditional exposure, or CFDs for flexible, leveraged long/short positioning. Use risk controls at all times.