Trade indices with ABSystem
It’s an easy way to add the world’s leading stocks to your trading portfolio.
What is an Index?
An index is a collection of stocks representing a specific industry or market sector. In other words, an index is a way to measure the performance of a particular sector or group of companies.
For example, the Dow Jones Industrial Average (called the Dow Jones) is a stock market index that represents the total value of the 30 largest US state-owned companies. There are countless stock indices around the world, each measuring a different aspect of the global and local markets.
The calculated value of the stock index is used by investors as an indicator of the current value of their constituent stocks. Investors often conclude whether the market has had a good or bad day based on whether the index has increased or decreased.
What are benefits from trading indices?
Stock indices provide an accurate and credible way to estimate the overall market sentiment. Indices can also serve as benchmarks for individual portfolios of stocks for more accurate trading.
Indices can offer exposure to an entire sector in a country. Traders don’t have to perform thorough research on individual companies. Indices also reduce the risk of a single company’s performance impacting a trader’s entire portfolio.
Price movements of indices are smoother since individual stock performances can’t lead to intense spikes in volatility. However, this volatility is sufficient for a trader to pick out numerous trading opportunities.