Stock indexes are a popular trading vehicle, but they can’t be traded directly. An index is simply a collection of stocks (or other asset) that moves according to the stocks held within it. Traders can analyze both the index and the futures/options contract they are looking to trade.
A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks (typically a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.
Indices traders speculate on price movements in stock Indices like the FTSE 100, the Dow Jones and DAX.
These well-known Indices are essentially baskets of individual Shares which are often ranked by independent institutions like major banks or specialist companies like Standard & Poor’s, the FTSE Group and Deutsche Börse.
So to trade indices like a pro, all you would need to do is:
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