Stock Indices

How to Trade the Intangible – a Mathematical Conundrum…

Just as the Romans predated the Brits with shares (the probable reason why the word indices still exists), the English coffeehouse brokers of the 17th century preceded Standards and Poor’s by about 200 years – John Castaing publishing his first listing of stock and commodity prices in Jonathan’s Coffee House in 1698 – the year stock brokers were banished from the Royal Exchange for their rowdy behaviour.

Trade the Economy, not the Company

Whether it’s the stock indices that measures the performance of the corporate environment, or the Purchasing Manager’s Index, which measures the performance of the nation’s economy, indexes are fascinating because they’re not instruments you can directly invest in. They provide a measure of activity; they’re a mathematical construct – a product manufactured by polling companies, credit ratings agencies and other advisory entities.

And yet, we trade on them every day: We buy Euros if Europe’s Consumer Price Index goes up and sell them if ZEW’s Manufacturers’ Sentiment Index goes down. We buy NASDAQ futures when the economy is booming and dollars are cheap, sell them when Apple threatens to embark abroad.

So, what are indices and how can we trade them?

STOCK INDICES – WHAT YOU WILL LEARN

Find out what stock indices are, how they are created, and why. Take your choice of courses on fundamental analysis to understand what lies behind an index, the difference between a weighted average and a mathematical one. And learn how you can hedge even the most complicated position with index futures.

Sign up now and access these amazing video courses

Financial Assets

Learn about shares and indexes – their joint history and how they interact.

Financial Analysis

Learn about the importance of economic indicators and their impact on forex markets.

Basics of Trading

Be up and running within hours – learn to go long or how to short markets when the indexes disappoint, and how to trade safely in a volatile environment.

Ebook Library

Learn about shares and bonds, indexes and indices.

Sharing in the Wealth – Trading Stocks & Shares

Ascribing value to a piece of paper is almost as old as paper itself. The Ancient Hebrews did it with the Old testament, the Chinese did it with paper money. When did the first Roman shares appear, and why did indices follow soon thereafter?
  • How are shares created and listed?
  • How to best analyse a company’s viability?
  • What are indices, how do they relate to Index futures, and how can we invest in a weighted average.

This and more in Sharing in the Wealth – Trading Stocks & Shares.