What is an index?

An Index is a method of measuring the value of a certain group of shares in stock market or cluster of stocks. For an example let’s say we have gathered and collected a group of stock from different companies so for each company we have different weight for each of stocks on the index, because we cannot simply take the avg. rate of each stock as bigger companies will have different rates than smaller companies.

What types of indices exist?

Each index compute a group of the stock market.

Usually, the class is a country but it can be just an industry section, like technology or industrial.

Here are the most popular:

• Dow Jones (DJ 30)
• S&P 500
• NASDAQ 100
• DAX 30
• FTSE 100
• CAC 40
• NIKKEI 225

What makes the indices price move?

• Geographical Demography
• Political Movement
• Changes in stock prices
• Budget sessions
• Change in currency prices
• Inflation rates
• Change in interest rates of different countries
• Number of buyers and sellers in the market
• Change in demand

Why are indices good to trade?

• Indices have high volatility rate so generally yields good.
• Profit value is high.
• Waiting time is really low compare to some orthodox and traditional way of trading.
• Technical and in depth market analysis is not required to get success.

Advantages of option trading

• Risk management
• Time to decide
• Speculation
• Leverage
• Diversification
• Income generation