To learn everything about stock market indices, their ranking and to learn how to trade them efficiently online, here are some explanations and advice.Start trading indices
The stock market indices represent one of the most important asset sectors, as much for the traditional investors as those that trade online.
There are however different types of stock market indices, each has specific operational particularities.
The stock market indices, as indicated by their names, most often represent the performance of one stock exchange or market. Three different types of indices can be identified:
There are numerous stock market indices throughout the world, the majority group together the most profitable companies of a country or geographical area, others are composed of companies from a particular industry or activity. Of course, all the world stock market indices are not accessible online from trading platforms. Here are the major indices that you can easily access with the majority of online brokers:
For the most part, the stock market indices are calculated from the accumulated stock market capitalisation of all the companies listed on a stock market or in a sector of activity. The result is then divided by a value fixed at the creation of an index. Its rate changes over time according to the purchases.
However increasing numbers of indices only take into account the unique part of a company that can be exchanged on the stock market in the form of assets, the ‘shares’. Of course, other factors are also taken into account in the calculations of an index to make it as representative as possible, such as the volume exchanged, the share value and the capitalisation.
Generally, the indices are calculated several times using different methods. In the case of the stock market these calculations include the prices and for the placements, they include the dividends.
For a few years now, it has also been possible to speculate on the major stock market indices using online trading platforms, through the online ‘brokers’. These new brokers have made two particular tools available to their clients enabling speculation on the value of stock market indices, both rising and falling, and at lower fees of around 0.5%.
Of course, this method of speculation carries higher risks than placements and is more particularly suited to investors who understand how the stock market indices function and can complete analyses.