Indices (Gifxprime-FS)

Indices or Indexes are groupings of a specified number of stocks into one trade-able entity, either representing a particular market or portion of it. Although each stock can be bought and sold on its own, and index can also be traded as a whole.Indices are bought and sold in same way as an individual share.

Indices are mostly region based and investors also use them to gauge a particular economy’s health. Trading on Indices also allows investors to diversify their risk across the whole market instead of investing in a specific company. Major Indices are S&P 500, Dow Jones in USA, FTSE100 in UK, European indices such as DAX30 and Asian Indices such as NIkkei225, Shanghai Composite.

Indices Trading Example

Buying SPX500
Opening the Position
Opening price USD $ 2082.60 You decide to buy 1 contract at $ 2082.60 (1 contract=1$ per index point)
Closing the Position One week later the SPX500 has risen to $2092.60, you decide to take your profit by closing your buying position Market movement= 2092.60 – 2082.60 = 10 Gross profit on Trade = 2092.60*1-2082.60*1= USD$ 10 ($1 per Index point)