Indices, many shares in a single price.
What a stock market index measures, what moves it, and how indices are quoted and traded.
What an index is
A stock market index measures the combined value of a group of company shares, chosen by a published set of rules: the largest companies listed in one country, for example, or the companies of one industry. As the prices of those shares move, the index moves with them, so a single number shows how that part of the market is doing.
Most indices give each company a weight by its market value, the price of its shares multiplied by how many there are, so the largest companies move the index the most. Some weight companies by share price instead, or give each the same weight.
An index is a calculation, not something that can itself be bought. It is traded through products that follow its price, such as futures contracts, funds and contracts for difference.
Benchmark indices in Europe and Asia
What moves index prices
Company results
Results from the largest companies in an index can move the whole index, because they carry the most weight.
Interest rates
Lower interest rates can make shares more attractive than savings and bonds, and higher rates can do the opposite, so central bank decisions often move indices.
The economy and currencies
Growth, employment and inflation figures shape what markets expect companies to earn, and a weaker currency can help an index made up largely of exporters.
Events and sentiment
Elections, conflicts and changes in confidence move many shares at once, and an index moves with them.
How indices trade
Points
Index prices are quoted in points. A position gains or loses a set amount of money for each point the index moves, and that amount depends on the size of the position. The contract sizes Noryn Markets offers are confirmed on request.
Spread
Every index has a buy price and a slightly lower sell price. The gap between them is the spread, a cost paid on every trade.
Where the price comes from
A price for trading an index can follow the index itself, which is calculated only while its shares are trading, or a futures contract on the index: an agreement to buy or sell at a set price on a later date. A futures price reflects the interest and dividends expected until that date, so it usually differs a little from the index. How Noryn Markets prices each index is confirmed on request.
Trading hours and gaps
An index is busiest while the exchange where its shares trade is open. When that exchange opens after a night or a weekend, the price can start well away from where it closed, jumping past any orders set in between. That jump is called a gap. The trading hours Noryn Markets offers are confirmed on request.
Leverage and margin
Leverage lets you hold a position larger than the money you set aside for it, and the money set aside is the margin. Leverage magnifies losses as much as gains. If losses take the money in an account below the margin its positions need, positions can be closed automatically, at a loss. How much leverage is available differs by account type and by market, and the figures that apply to an account are confirmed on request through the contact form.
Dividends and swaps
When a company in an index pays a dividend, a share of its profits paid to shareholders, the index usually falls by about the value paid out, and positions receive or pay an adjustment to match. Some indices add dividends back into their value instead. A position held open overnight usually has a swap applied as well: a small charge or credit for financing the position.
Kinds of index
Indices can be considered by the markets they cover. Any indices shown on this page are a small selection of examples for market context, not a complete catalogue. Which indices Noryn Markets offers is confirmed on request.
Large companies in one country
The largest companies listed in one country, such as the United States, the United Kingdom, Germany or Japan. These are the indices most often quoted in the news.
Broad market
Hundreds of companies, large and small, giving a wider view of a market than its largest companies alone.
Technology-heavy
Indices in which technology companies make up much of the value, so they tend to move more sharply than broader indices.
Regional
Companies from several countries in one region, such as the euro area or Asia and the Pacific.
The risks
Leverage magnifies losses
A small move in an index can cause a loss larger than the margin set aside for a position.
Gaps at the open
After news overnight or over a weekend, prices can open well away from the last close, past any orders set in between.
A few companies can dominate
When a handful of large companies carry much of an index’s weight, news about them alone can move the whole index.
Costs add up
Spreads and swaps are paid whether a trade gains or loses, and they add up over many trades or long-held positions.
Questions about indices
Can I buy an index itself?
No. An index is a calculation. It can only be traded through a product that follows its price, such as a futures contract, a fund that holds its shares, or a contract for difference.
Why does an index sometimes open far from where it closed?
News that arrives while the exchange is closed, such as company results or events abroad, is reflected in the price all at once when trading starts again.
What happens to a position when companies pay dividends?
The index usually falls by about the value paid out, and positions receive or pay an adjustment to offset it: a buyer usually receives one, and a seller usually pays one.
Which indices does Noryn Markets offer?
An index tracks a group of shares chosen by a market or a sector, and the page above explains how one is priced and why it can gap. Which indices Noryn Markets offers is confirmed on request through the contact form.
What are the trading hours for indices?
An index is busiest while the exchange behind it is open, and a price for trading it may be quoted for longer than that. The hours that apply to an account are confirmed on request through the contact form.
Other markets
- Forex
Currency pairs, where one currency is priced against another.
- Commodities
Raw materials, from energy to agricultural products.
- Precious metals
Metals valued for their scarcity and long history as a store of value.
- Shares
Prices that follow individual companies listed on stock exchanges.
- ETFs
Funds that trade on an exchange in the same way as a single share.
Interested in indices?
Register your interest, and say which kinds of index you would like to hear about.
Open accountImportant information
Trading forex and contracts for difference involves a high level of risk, and it is not suitable for every investor. These products use leverage, which means a position can be held with only part of its value set aside as margin, and leverage magnifies gains and losses alike. A position may be closed when margin requirements are not met. Markets can move quickly, and at times a market can be difficult to trade at all. Past performance is not a reliable indicator of future results. Nothing on this website is investment advice or a recommendation, and nothing here takes account of your objectives, your experience or your circumstances. Consider your own circumstances, and seek independent advice before you act.
This page explains a market in general terms, for people deciding whether they want to learn more about it. It is not advice about that market or about any instrument in it, and naming something here does not mean it can be traded through Noryn Markets.