How Does It Work?

Index trading is a popular method for investors to gain exposure to financial markets without the need to research and invest directly in individual stocks.

Trading stock market indices serves as a risk mitigation strategy in stock trading. An index is typically constructed as a weighted average of the prices of its constituent companies, with specific criteria that a company must meet to be included

By tracking the performance of a broad array of stocks, an index aims to reflect the overall status of a particular industrial sector or an entire country's stock market. To facilitate buying and selling, fund providers develop both active and passive index-linked funds, as well as derivatives. Indices act as a barometer for the stock market's overall performance, with the direction of an index's value indicating the health of the economy or the specific industrial sector it represents