Historically, investors needed a way to analyse the overall performance of the market. After all, you could never make a statement on the US economy by only looking at, say, Apple Inc.'s stock. Due to this need the stock indices emerged representing the weighted average value of selected top-performing stocks and aiming to provide a quick glance at the market as a whole.
An index is a good way to look at particular markets, but for investors, it offers a way to gauge the performance of their individual portfolios, so underperforming specific investments can be adjusted to be more in line with the general trend of the market.
Indices can have a variety of variables. For starters, the number of stocks in any particular index can vary wildly, from a few dozen companies to thousands. The price of an index is found through weighing. Price-weighted indices are averaged based on the price of each component stock.
EuroFX uses the world’s fastest non-bank market makers who specialise in Indices and Commodities trading to give you the tightest prices and best execution.
EuroFX Index CFDs are contracts for difference over a range of global stock market indexes. For example, the US500 and NAS100 Indices represent a basket of blue chip stocks listed on US stock exchanges. This means that when you trade an Index CFD, you are taking a position against the broader market rather than a single stock. Index CFDs also have the benefit of trading outside of the normal market hours of the stock exchange, similar to how the FX market trades. This means traders can manage their risks more effectively.
Index CFDs are valued in the currency of the respective stock exchange which they derive their value from. For example, the US Indices (US500, US30 and NAS100) are valued in US dollars, the GER30 is valued in Euros and the AUS200 in Australian dollars.