What is an Index?
Indices are a method of measuring the value of a market segment. The best known indices measure the performance of. An index is a mathematical construct, so you cannot invest in it directly. However, there are that attempt to resemble the development of indices.
Some important stock market indices:
|500 major US companies|
|Index of the Hong Kong stock exchange|
Types of indices
In a market-value weighted or-weighted index such as the Hang Seng Index, the size of the companies are factored in. Here, a large change in the price of the largest component of the index can result in a relatively large change of the index value.
In a price-weighted index such as the Dow Jones Industrial Average, the price of each component stock determines the value of the index. Here, theof even a small single company can strongly influence the index.
Trading stock market indices
Trading index funds works on the same underlying principles as trading stocks. Here at tradimo, we will add plenty of lessons on stocks trading in the future. Technical analysis can also be applied to trading index funds:
You can also discuss index funds in our forums: