Why trade indices?

Discover why traders around the world choose indices for their trading success.

Trading indices – The basics

With indices like DAX and Dow Jones making headlines every day in the financial world, what exactly are indices and how can traders benefit from adding them to their trades? Let’s start with the basics. An index, also known as a stock market index, is a measure of a group of companies and is used to evaluate the performance of a sector, region, or national economy.

The first index was created in 1885 by Charles Dow, editor of the Wall Street Journal and co-founder of Dow Jones & Company. Before the digital age, the price of an index was calculated using a simple average that added up the prices of its components divided by the number of companies.