Market Index Definition – What is Market Index? | CFI LB

market index

A market index, stock index, or stock market index is a method used to track the performance of a group of financial products uniformly. The stock market index is an indication of the value of a segment of the stock market and helps investors compare actual stock prices with past prices to evaluate market performance.


Simply put, a market index is a mathematical average of how a certain financial market is doing. An example of an index is if you took the weight of 10 people and then worked out the average weight, that would be an index. As people’s weights change the index would change too.


Some of the market’s leading indices include:


  • S&P 500 (top 500 largest companies in the US)
  • Dow Jones Industrial Average (30 largest companies in the US)
  • Nasdaq composite (3,000 stocks with a big focus on technology companies)
  • MSCI world index (all major stocks across 23 developed countries)
  • The dollar index (shows how strong the US Dollar is)


Investing in a portfolio of indexes can be a good way to optimize returns while balancing risk. With CFI, you can trade a diversified number of [indices] including US, European and Asian products. If you have a certain view on a specific stock market or the stocks of a region, go for indices as they allow you to have directional views on a large number of companies within one product, instead of buying or selling individuals stocks.


Key takeaways:


  • It is used by traders to describe the market and to compare the return on investments
  • An index is a calculation taken from the prices of a group of stocks using a weighted arithmetic mean
  • The S&P 500 is the largest stock market index


CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
CFI Financial Group has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest - CFI LEBANON
BDL no. 40
Ellipse Center 3rd floor, Charles
Malek Avenue, Achrafieh

CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

The Best Online Financial Trading Services, Middle East, 2020
Entrepreneur Magazine

Please publish modules in offcanvas position.