How to trade indices online?

Find out everything you need to know about trading the world's major stock indices and learning how to analyse their prices in our explanations and information.

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Learn to trade the world's major stock indices

The exchange rates of the main stock market indices

A good knowledge of world stock market indices is of course essential if you want to invest in the markets. The world stock market indices group together the values of the securities on which you will be able to invest via your investment product or via derivative products such as CFDs through an online broker. In this article, we propose that you discover the main world stock market indices as well as their characteristics and their representativeness.

Stock index trading: in brief

  • World stock indices are indices used to assess the economic health of a country or geographical area.
  • Stock indices are made up of shares from the market concerned
  • Stock indices can be traded using ETFs or CFDs, which replicate the performance of the index.
  • Of course, it is also possible to invest directly in the shares that make up a stock market index.

How do I trade stock market indices?

Stock indices are measures of the performance of a group of shares. They are often used as a barometer of the health of the economy. There are several ways of trading stock indices.

Here are some of the most common methods:

1. Buying or selling shares

  • You can buy or sell shares in the companies that make up the index.
  • This will allow you to profit from the rise or fall of the index.
  • This is the simplest method, but it can be risky because it exposes you to the performance of individual companies.

2. Trading CFDs (Contracts for Difference)

  • CFDs are derivatives that allow you to speculate on whether the price of a stock market index will rise or fall.
  • You don't own the index, but you are making a bet on its future direction.
  • This method is more complex than buying or selling shares.
  • Warning: CFDs are a high-risk product and are not suitable for all investors.

3. Trading futures or ETFs

  • Futures are forward contracts that oblige you to buy or sell a stock index at a given price on a given date.
  • This method is even more complex than CFDs and is generally used by professional investors.


Learn to trade stock indices: What is a world stock index?

First of all, let's take a few moments to recall what a stock market index is and what it is used for. A stock market index is actually a group of shares whose number varies according to the index.

The purpose of a stock market index is to evaluate a sector of activity, a stock market or financial centre or a particular economy. Most often, it is the best performing stocks of a stock exchange that are used in these indices and their composition.

Among the best-known stock market indices are of course the French CAC 40, the German DAX 30 and the British FTSE 100, but there are also many other international indices that you will also discover on our site.


The main French stock market indices:

Let's start by looking at the main French stock market indices on which you can invest or buy shares online.

  • The CAC 40 is of course the benchmark index of the Paris Stock Exchange and therefore of the Euronext Paris market. As its name suggests, this index includes 40 stocks, i.e. the 40 largest market capitalisations on the French market, with stocks such as Orange, Saint-Gobain, Airbus, TotalEnergies and Danone.
  • The SBF 120 is another benchmark index for the French market and precisely the second most important for investors. It is in fact an extension of the CAC 40 index since it includes the 40 stocks of the latter plus the next 80 largest market capitalisations.
  • There are also other indices on the French stock market, including the CAC Next 20, the CAC Small and the CAC Mid etc.


The main European stock market indices:

Other European countries also have their own stock market indexes, which are among the most important on the market today. This is the case for Germany and the United Kingdom.

  • The DAX 30 is the benchmark stock market index for Germany. It is therefore representative of the Frankfurt stock exchange. As its name suggests, it is currently composed of 30 stocks, corresponding to the 30 largest capitalisations in this financial centre. However, the DAX 30 will soon become the DAX 40 and include 10 additional stocks. Among the large stocks in this index are Allianz, Bayer, Daimler-Benz, Volkswagen, Siemens and Adidas. Other minor stock indices on the German stock exchange include the HDAX, MDAX, SDAX and TecDAX.
  • The IBEX 35 is the main Spanish stock market index, representative of the Madrid Stock Exchange and compiled by the Bolsas y Mercados Espanoles. Its name tells us that it is made up of the 35 most important Spanish companies with a weighting by market capitalisation. It includes internationally known stocks such as Iberdrola, Enagas, Repsol, Bankia and Amadeus.
  • The FTSE MIB for Milano Italia Borsa was formerly known as the S&P/MIB. It is the main stock market index of the Italian stock exchange. It is composed of the 40 largest stocks listed on this financial centre. It includes important stocks such as Eni, Intesa Sanpaolo, Generali, Pirelli and Saipem.
  • The SMI or Swiss Market Index is a stock market index representing the shares listed on the Six Swiss Exchange or SIX. It groups the 20 main stocks of this financial centre and includes Nestlé, Roche, Novartis, Adecco and Richemont.
  • The FTSE 100 is the UK stock market index and the main index of the London Stock Exchange. It is also known as the "Footsie" and, as its name suggests, it groups the 100 largest capitalisations in the country. The name FTSE stands for Financial Times Stock Exchange. This index includes the largest British companies, including HSBC, Barclays, Tesco, Rolls-Royce and Vodafone. The London Stock Exchange also has other smaller stock market indices, including the FTSE 250 and the FTSE 350, which include more stocks.


The main US stock market indices:

The United States is currently the largest stock market in the world and has several major stock market indices, including the DJ 30, Nasdaq and S&P 500.

  • The Dow Jones Industrial Average, also known as the DJ 30, is currently the oldest stock market index in the country. As its name suggests, it mainly includes stocks of companies from the industrial sector as well as established groups. The most recent or most technological stocks are grouped together in the Nasdaq stock index, which we will discuss below. The Dow Jones index includes 30 companies, including Chevron, Apple, Visa, McDonald's, Verizon, Procter & Gamble, 3M and Walmart.
  • The Nasdaq, which is also the name given to a stock market, is an index known for its concentration of technology and computer stocks in particular. In reality, the Nasdaq includes more than 3,200 different stocks of companies operating in other sectors. The calculation of this index uses an index weighting of each stock according to the size of its market capitalisation. The Nasdaq index is most often referred to as the Nasdaq 100, which lists the 100 largest capitalisations in this sector, including stocks such as IBM, Google, Apple and Amazon.
  • The S&P500 is another major US stock market index based on 500 large companies listed on the NYSE and NASDAQ exchanges. It is currently owned and managed by Standard & Poor's, which is one of the three major credit rating companies. The index covers nearly 80% of the US stock market in terms of capitalisation and is a non-dividend index.
  • As the US is the world's largest stock market, it has other stock market indices including the Dow Jones Utility Average, the Dow Jones Composite Average, the NYSE Composite and the Russell 1000.


The main Canadian stock market index:

In Canada, there is one major stock market index, the S&P/TSX, which is an index of the overall performance of the Toronto Stock Exchange. The number of stocks included in this index is therefore very large. This is why, as an investor, we are most often interested in the S&P/TSX 60 index which, as its name indicates, includes only the 60 largest market capitalisations in the country.

The index includes major stocks such as Barrick Gold, Aurora Cannabis, Blackberry and Enbridge.


The main Asian stock indices:

Asian stock exchanges are currently attracting more and more investors who buy and trade shares listed on Japanese or Chinese indices.

  • The Nikkei 225, for example, is the benchmark index for the Japanese stock market. As its name suggests, this index comprises 225 stocks listed on this financial centre. One of its particularities is that it is not calculated by weighting an index point according to the size of the company but by an average. Among the leading stocks in this Japanese stock index are Honda, Toyota, Nikon, Toshiba, Fujifilm and Citizen Watch. The Tokyo Stock Exchange also has other stock indices such as the Nikkei 300, Nikkei 500, Topix and JASQAD.
  • The SSE Composite Index is the stock market index that tracks the performance of the Chinese stock market in Shanghai. Among the stocks that make up this index are Bank of China, Tianjin Port and Youngor Group.


The main global stock market indices:

In addition to the national stock market indices we have just presented, there are also more global stock market indices that group together all the world's stocks or stocks from certain sectors, regardless of the geographical area.

  • The MSCI World Index, for example, is a benchmark for assessing the health of the global stock market. It includes stocks from the world's major economies including Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.
  • The MSCI Emerging Market is, as the name suggests, an index that includes the shares of companies located in emerging countries such as South Africa, Morocco, Egypt, Brazil, Chile, Colombia, Mexico, Peru, China, South Korea, India, Indonesia, Malaysia, Philippines, Taiwan, Thailand, Turkey, Qatar, United Arab Emirates, Hungary, Poland, Czech Republic, Russia and Greece.
  • The MSCI ACWI is a stock market index that combines the two previous indices, the MSCI World Index and the MSCI Emerging Market.
  • The S&P Global 100 is also a stock market index managed by Standard & Poor's, but it is composed of 100 multinational companies from 29 different countries. It includes stocks such as AXA, Bayer, Barclays, Canon, Daimler, ExxonMobil, Alphabet, Microsoft, Nestlé, Pepsico and Vodafone.
  • Very similar, the S&P Global 1200 allows Standard & Poor's to track more than 31 countries and nearly two-thirds of the world's market capitalisation. It is calculated using other S&P indices, including the S&P 500 mentioned above, the S&P/TSX 60, the S&P Latin America, the S&P Asia Pacific and the S&P Europe 350.


How do I trade stock indices?

Trading in stock indices can be a way of diversifying, but it's important to be well prepared before you start, because it's a risky business.

Before you start trading stock indices, it's important to:

1. Educate yourself

  • It is essential to have a good understanding of the financial markets and stock market indices before you start trading.
  • There are many free and paid resources available to help you learn, including books, articles, tutorials and online training.

2. Define your objectives

  • Before you start trading, it's important to define your investment objectives.
  • What is your investment horizon?
  • What is your risk tolerance?
  • What are your return objectives?

3. Choosing a broker

  • You will need an account with an online broker to trade stock indices.
  • Compare the different brokers on the basis of their fees, services and trading platform.

4. Define a trading strategy

  • It is important to define a trading strategy before you start trading.
  • Your strategy should define your approach to the market, your entry and exit points and your risk management.

5. Start with a small amount

  • It's important to start with a small amount that you can afford to lose.
  • Never invest money that you need for your day-to-day needs.

6. Manage your risk

  • Trading in stock indices is a risky business.
  • It is important to put measures in place to manage your risk, such as stop-loss and limit orders.

7. Monitor the markets

  • It's important to monitor the markets regularly to keep track of prices and trends.

8. Don't panic

  • Financial markets can be volatile.
  • It is important not to panic if the market falls and to stick to your trading strategy.