Indices

Trading CFDs On Indices

An Index (plural – Indices) is usually defined as a portfolio of shares, representative of a particular market sector. For example, the Financial Times Stock Exchange 100 Index, the FTSE-100, is a share index of the exchanges Top 100 listed companies (by market capitalization).

The FTSE-100 started life on January 3rd 1984 with an index base value of 1,000. That index base value is still used today and forms a quick reference to the current index level against historical values. At today’s 7732 quotes, the FTSE is valued at 7.7 times the base.

Indices can be considered broad indicators of a country’s economic health. If an economy is performing well, companies produce and sell more goods, their share price rises, as does the value of the index.

Trading the individual companies that make up an index would be complicated and expensive as it would involve owning shares in each and every one of the companies. While trading the index isn’t exactly the same, it is the closest possible approximation. The index itself isn’t a total of share prices, but rather the result of calculations based on market capitalization for example, as is the case with the FTSE-100.

Top Ten FTSE-100 Companies By Market Cap

BHP Bilton

£148 bn.

Rio Tinto

£86 bn.

Royal Dutch Shell

£135 bn.

GlaxoSmithKline

£63 bn.

HSBC Holdings

£118 bn.

Unilever

£56 bn.

Vodafone Group

£93 bn.

BAT

£49 bn.

BP

£91 bn.

BG Group

£49 bn.

raders gauge the performance of an index based on the full quote, which in the case of the FTSE-100 would look something like the example below:

7,752.15 ↑18.4 (0.24%)

This tells us the current price (7,752.15), the current change from the previous day’s close (Up 18.4) and the change from the previous day’s close as a percentage (0.24%).

Trading with EuropeFX gives you access to CFDs on some of the most highly traded indices across most of the global financial centers, including of course the FTSE-100 as well as the S&P 500, the Dow, Nikkei, and DAX to name just a few.

The full list of supported indices can be found in our asset index.