A stock index is one of the most popular investment products among investors. Stock indices track the performance of a basket of individual stocks, enabling the investor to trade on the performance of that stock market as a whole, rather than buying/selling shares in individual companies within the index.
A stock index reflects local economic conditions. The popular/main stock markets are: US30, UK100, Japan Index and HK50. Ideal investment opportunities: All index transactions can be traded in real-time immediately. Low entry point to the market. Investors may invest in small deal sizes and may benefit from the international stock market fluctuations with long-term and short-term buy-in and sell-out strategies.
Using indices as market indicators.
If the price of an index is increasing, that means the individual asset prices are also rising, and the industry is working well. This information can be used for trading the individual assets; a trader can conclude that since the index value is going up, it may be worth buying a certain asset because its price may increase even more.
On the other hand, if the index price starts declining, a trader can take a note from it, speculating that even though their asset is still stable or increasing, its price may start declining because other assets are behaving that way.
Now, all those conclusions are speculations and cannot always work the same way. Sometimes, those predictions will become the reality, but sometimes they will not. It is important to keep this in mind when using indices as price indicators.
The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. CFD Accounts provided by ExxoMarkets LLC.
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