A smart approach to trading is not to put all the eggs in one basket. In order to diversity portfolios, successful traders tend to place funds in indices which enables them to minimize losses. Unlike other instruments, indices are not easily manipulated because they are made up of prices of the shares that make up that index.
Also known as Nikkei225, this price-weighted index consists of the leading 225 publicly-owned companies in Japan, including prominent brands such as Sony Corporation, Toyota Motor, Central Japan Railway, Canon Inc and Kyocera.
The STOXX Europe 50 index provides a blue-chip representation of supersector leaders in Europe covering almost 50% of the free-float market capitalization of the European stock market. The index covers 50 stocks from 18 European countries.
Also known as CAC40, is a benchmark French stock market index. The index represents a capitalization-weighted measure of the 40 most significant stocks among the 100 largest market caps on the Euronext Paris. It is one of the main national indices of the pan-European stock exchange group.
Mainly known as DAX, it is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. DAX measures the performance of the Prime Standard’s 30 largest German companies in terms of order book volume and market capitalization. It does not necessarily represent the vitality of the economy as whole due to its small selection.
Known as Swiss Market Index (SMI), it is Switzerland’s blue-chip stock market index, which makes it the most followed in the country. It is made up of 20 of the largest and most liquid Swiss Performance Index (SPI) stocks. As a price index, the SMI is not adjusted for dividends. However, it is used as the benchmark for numerous mutual funds, index funds and ETFs.
Also called the FTSE 100 Index, is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation. It is seen as a gauge of prosperity for businesses regulated by UK company law. The FTSE 100 broadly consists of the largest 100 qualifying UK companies by full market value.
Known as The Dow Jones Industrial Average, or simply the Dow, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. As it only includes 30 large cap companies, is not weighted by market capitalization, and does not use a weighted arithmetic mean.
Recognized as the NASDAQ-100, it is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. It is a modified capitalization-weighted index. The stocks’ weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components.