What are stock indices? US30, S&P 500, DAX and more

A stock index measures the value of a group of shares in one number. Instead of asking "how is Apple doing?", an index answers "how is the US stock market doing?". Trading an index lets you take a view on a whole economy with a single position.

The indices traders watch most

Broker symbols vary, so search for the one your platform uses.

Price-weighted vs. market-cap-weighted

• Market-cap weighted (S&P 500, Nasdaq 100, DAX): bigger companies have more influence. A few giant tech stocks can move the whole S&P 500.
• Price-weighted (Dow Jones): shares with a higher price count for more, regardless of company size.

You don't need to memorise this, but it explains why indices sometimes move differently on the same day.

What moves indices?

• Company earnings, especially from the largest members.
• Interest rates and central banks: lower rates usually support share prices.
• Economic data: jobs, inflation, growth.
• Risk sentiment: in panics, indices fall fast and together.

Indices tend to rise over the long term because economies and company profits grow, but they can fall 20–30% or more in bear markets.

How index CFDs work

On an index CFD you trade the price in points. Contract size depends on your broker: often 1 lot = $1 or €1 per point, but some brokers use $10 or other values. Check the contract specifications before you trade.

Example: US30 at 42,000. You buy 1 lot at $1 per point and sell at 42,150: profit = 150 points × $1 = $150. If it had fallen 150 points, you'd lose $150.

In the EU, retail leverage is capped at 1:20 on major indices and 1:10 on others. Index CFDs held overnight pay or receive a daily financing charge (swap).

Tips for trading indices

1. Trade the cash session. Most volume and the cleanest moves come after the underlying stock exchange opens (16:30 Greek time for US indices, 10:00 for the DAX).
2. Watch the gap. Indices often open far from the previous close; stops can be filled worse than planned.
3. Size from your risk. Index points move fast: use the 1% rule and a stop loss every time.

Want to see how we size US30 trades? It's in our free cheat sheet: download it.