Market Index Definition – What is Market Index? | CFI

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


Credit Financier Invest (Mauritius) Ltd 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.
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Important Disclaimer:

We would like to remind that while we endeavour to provide best possible services, CFI provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.

Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest (Mauritius) Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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