Indices trading is especially important in relation to IG's platform. In this section, we define indices trading in the context of general investing and explain what it means to you when trading with IG.

Indices trading is the process by which traders attempt to profit from indices' price movements.

There are numerous indices available for trading that measure the performance of the stock market in various markets, such as countries, sectors, or commodity types. Indices traders can specialise in a single index or trade multiple indices as part of a larger strategy.

Because indexes are indicators of the price movements of several assets and have no actual physical basis to trade, they cannot be bought or sold like stocks or commodities. Instead, indices traders speculate on the movements of various indices using derivatives such as index futures, CFDs, digital 100s, and ETFs.

Indices trading involves buying and selling stock market indices, which represent the performance of a group of stocks from a particular exchange or sector. Popular indices include the S&P 500, Dow Jones Industrial Average, NASDAQ, FTSE 100, and DAX 40. Instead of trading individual stocks, traders speculate on the overall movement of an index using derivatives like futures, options, contracts for difference (CFDs), or exchange-traded funds (ETFs). Indices trading allows for diversification, as an index reflects the broader market rather than a single company’s performance. It is influenced by economic data, corporate earnings, interest rates, and geopolitical events. Traders use technical and fundamental analysis to predict price movements, often applying strategies like trend following, mean reversion, or breakout trading.