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## What are Indices?

Indices are a way of tracking the performance of an underlying group of assets, in this case, equities.

An example would be the S&P500 which is made up by 500 of the US's biggest listed companies. If the price of the individual equities rise that make up the S&P500, then you would see an increase in the value of the S&P500. This would be vice versa if the underlying equities also dropped in value. There are multiple indices from all around the globe with some of the major ones in the UK, known as the FTSE100 or the German index which is known as the Dax30.

When trading Indices, you're not physically trading the individual equities, but instead the price movements of the underlying equities. This is known as a CFD (Contract For Difference). #### Why trade Indices?

• Benefit from rising and falling prices of equities
• Fast execution #### Tips trading Indices

• 1 CFD lot is 10 contracts
• If trading a US Index, 1 CFD lot is \$10
• If trading a UK Index, 1 CFD lot is £10

Example 1

If you were to trade the S&P500 and you buy at a price of 3415 and the price went to 3445, you would have made a profit of 30 points on the move.

If you had bought 1 CFD lot, this would have resulted in a profit of \$300. However, if the price fell to 3400, then you would have lost 15 points and as a result, \$150.

Example 2

EURGBP sell

If you were to trade the S&P500 and sell at a price of 3415 and the price went to 3445, you would have made a loss of 30 points on the move.

If you had sold 1 CFD lot, this would have resulted in a loss of \$300. However, if the price fell to 3350, then you would have made 65 points and as a result, \$650.

Example 1