What is a stock index? How to invest in stock index?

　　The securities market is the oldest market in financial investment and the market with the largest trading volume and number of traders in the world,and stocks are a type of securities.The stock market is a barometer that reflects the economy of each country.With the advancement of the Internet era,we can not only invest in Taiwan stocks,but also invest in global stocks based on Taiwan.The most direct way to participate in the investment of stocks in other markets is to invest in their stock indexes.This method does not need to go through the complicated stock selection stage.By investing in the stock index,it is equivalent to buying and selling the best stocks in the local market,plus the stock index.Flexible trading methods are becoming one of the most popular trading varieties in the world.In this article,I will introduce you to what is a stock index?How to invest in stock index?

　　"Stock index",as its name implies,is a stock price index,also known as a stock market index and a stock price index.It is an indicator to measure the price performance of a group of stocks on an exchange.Indicator numbers for reference.The stock index is the result of sampling,weighted average and calculation of a basket of stocks.For example,the Taiwan Weighted Index(TAIEX)is a stock price index calculated by the overall weighted average of the market capitalization of stocks listed in Taiwan.The sample is all listed transactions.The Taiwan market stocks in China,such as large market capitalization and well-known ones such as TSMC,Hon Hai,Cathay Pacific,Sinosteel,and Formosa Plastics are all important representatives.The Hong Kong Hang Seng Index(Hong Kong HK50)tracks the stock price performance of the 50 companies with the largest market capitalization on the Hong Kong Stock Exchange.It is a composite index calculated by the weighted average of a basket of stock prices.

　　In addition to the above two stock indices,other famous stock indices around the world are as follows:

　　1.Dow Jones Index(DJ30)

　　The full name of the Dow Jones Industrial Average,the index is calculated based on the weighted average of 30 reliable and important blue-chip stocks in the U.S.stock market.These 30 stocks come from different fields,including Disney,Apple,Microsoft,Intel,IBM,Exxon Mobil,Chevron,Walmart,Nike,Procter&Gamble,Johnson&Johnson,Boeing,Coca-Cola,McDonald's,Pfizer,Goldman Sachs,JPMorgan Chase and many other famous companies.

　　2.Standard&Poor's 500 Index(SP500)

　　The full name of the Standard&Poor's Index is the stock price index compiled by Standard&Poor's,the largest securities research institution in the United States.At present,the index contains 400 industrial stocks,20 transportation stocks,40 utility stocks and 40 financial stocks.The S&P 500 covers the most popular and most owned U.S.stocks,which are very representative.powerful.

　　3.Nasdaq Index(NDX)

　　The full name is the Nasdaq Composite Index or the Nasdaq 100 Index,which is based on screening 100 common stocks listed on the NASDAQ market.Its 100 constituent stocks all have the characteristics of high technology,high growth and non-financial,and can be said to be the representative of American technology stocks.At present,the largest weight is Apple,followed by Microsoft,Google,Intel and many other well-known companies.

　　4.FTSE A50 Index(A50)

　　The full name of the FTSE China A50 Index is compiled by FTSE Russell Index Co.,Ltd.,one of the four largest index companies in the world.The A50 Index is a real-time tradable index of the top 50 A-share companies by market capitalization on the Shanghai and Shenzhen Stock Exchanges.Its total market value accounts for 33%of the total market value of A-shares.A benchmark for the market and the flagship index of the FTSE China Index Series.

　　5.CSI 300 Index(CHINA300)

　　The CSI 300 Index is a constituent stock index compiled and released by the China Securities Index Company affiliated to the Shanghai Stock Exchange by selecting 300 A-shares with large market capitalization and good liquidity from the Shanghai and Shenzhen stock markets,weighted by the market value of free-floating shares.The constituent stocks of the CSI 300 are composed of 300 big blue chips with outstanding profitability.It is an important stock index that reflects the barometer of China's economy like the A50.

　　6.Nikkei(JPN225)

　　The Nikkei is the most representative stock index in Japan.It is a barometer representing the quality of the Japanese stock market or capital market.It is also one of the factors that reflects the value of the Japanese yen.The Nikkei index usually quoted by the media refers to the Nikkei 225 index..The Nikkei 225 Index is based on the prices of the 225 stocks with the most active trading volume and the highest market liquidity.It selects stocks with high liquidity in technology,finance,transportation,public,capital goods and others,consumption,and materials.Mainly include Panasonic Electric Works,Nissan Motor,Toyota Motor,Nomura Securities,Shiseido,Kao and other well-known enterprises.

　　7.Korea Composite Stock Price Index(KOSPI)

　　The Korea Composite Stock Price Index is calculated from the prices of all stocks traded on the exchange,with January 4,1980 as the benchmark start date of the index,and the opening price of the stock market on that day as the 100-point benchmark.The unit is calculated in KRW,the highest and lowest are based on the extreme value that occurs in the transaction,and there are more than 780 constituent stocks.

　　8.India SENSEX Index(SENSEX30)

　　The Indian SENSEX Index,also known as the Bombay Sensitive 30 Index and BSESENSEX,is the most widely used index in India.It is a representative index of emerging markets and an important reference index for investing in India.It is issued by the Bombay Stock Exchange.

　　The Bombay Stock Exchange is the oldest stock exchange in Asia and the second largest market in India.Currently,there are more than 6,000 companies listed on the Bombay Stock Exchange,and 2,500 companies are actively trading,which makes the Bombay Stock Exchange an Gateway to Indian Capital Markets.Since the"Indian stock market"mentioned by various media actually refers to the Bombay Stock Exchange,the SENSEX30 index of the exchange has almost become synonymous with the Indian stock market.

　　9.Vietnam VN30 Index(VN30)

　　Vietnam's stock market has become more and more liquid in recent years,attracting the attention of many investors.The Vietnamese stock market continued to rise from 2017 to 2018.The Vietnamese VN30 index rose from 620 points to more than 1,100 points during the year,nearly doubling.In 2018,the Vietnamese stock market was also one of the best performing Asian stock markets.The Vietnam VN30 Index is an index calculated by using the weighted average of the 30 blue-chip stocks with the largest market capitalization in Vietnam.

　　10.UK FTSE 100(UK100)

　　The FTSE 100 Index is compiled by the world-class index calculation financial institution FTSE(FTSE Group),covering the top 100 stocks traded on the London Stock Exchange and ranked in the top 100 by market capitalization.It is one of the most popular financial products for investors in the world.,together with France's CAC-40 index and Germany's Frankfurt index and known as the three major European stock indexes,is currently one of the most important indicators for global investors to observe European stock trends.

　　11.French CAC-40 Index(CAC40)

　　Paris Stock Exchange ranks fourth in the world after New York,Tokyo and London,and the most important stock market index in France is the CAC40 index.The French CAC40 index consists of 40 French stocks.Compiled by Paris Stock Exchange with the share prices of its top 40 listed companies,it reflects price fluctuations in the French securities market.

　　12.Germany DAX30 Index(DAX))

　　The German DAX index is an important stock index in Germany.It is a blue-chip stock index launched by Deutsche Börse Group.Like the American Standard&Poor's 500,the French CAC40 stock index and the British FTSE 100 stock index,it is a market capitalization-weighted average stock price index.

　　Unlike other indices,the DAX30 attempts to reflect the total return of the German stock market,while other indices only reflect changes in market prices.The DAX30 takes into account dividend income and nominally reinvests all dividend income(as a percentage of constituents)in stocks.As such,even if German stock prices are unchanged,the DAX 30 could still rise on dividend income.Euro 13,European Stoxx 50 Index(STOXX50E)

　　The Euro Stoxx 50 Index is regarded by the financial securities industry as an indicator index reflecting the overall situation of the stock prices of large listed companies in the euro area.The constituent stocks of the index cover most industries such as banking,utilities,insurance,telecommunications,energy,technology,chemicals,industrial products,automobiles,food and beverages,medical care,raw materials,etc.The fluctuations of the Euro Stoxx 50 index directly affect the EU and even the economic development and stability of West Asian and North African countries.

　　14.Russia RTS Index(RTSI)

　　The two major stock indexes in Russia are the RTS Index and the Moscow Index,which are important indicators for many Russian,Eastern European and Emerging European funds.It collects the stocks of the top 50 listed companies on the Moscow Exchange and re-examines the index constituents every three months..Although the Moscow Index is the largest stock market index in Russia,since it is denominated in Russian rubles,international stock market transactions are still dominated by the RTSI index denominated in US dollars.

　　How to invest in stock index?

　　The first choice for investing in stock indexes is to choose a stable trading platform.The mutual market is one of the excellent local trading platforms in Taiwan.The trading varieties cover the world's major foreign exchange currencies,precious metals,commodities and stock index CDFs.The trading commission spread is also the lowest in the market.When investing in a stock index,you need to know the factors that affect the stock index,the matters that affect the stock index,and the trading skills.

　　1.Financial news

　　Reading financial news is a must-do before investing in stock indexes.Through financial and economic news,you can learn about the latest central bank announcements,employment data and economic events.These are all important factors that lead to changes in stock index prices.Read this information to understand Investor sentiment and then make the right decision as possible.

　　2.Company financial report

　　Since the stock index is composed of stocks of many listed companies,learning to read the financial reports of listed companies is also one of the key points.Reading the company's financial reports of the constituent stocks can quickly understand the profit or loss of the major weighted companies,find potential factors that will cause the stock price to rise or fall,and then comprehensively judge the price trend of the index.

　　3.Important announcement

　　Listed companies will issue announcements when there are changes,such as company dividend plans,merger or reorganization plans,changes in management,or potential events favorable or risky,which may affect the stock price and thus have a positive or negative impact on the index price.

　　4.Changes in Index Constituents

　　When the index company adds or removes constituent stocks,the price of the weighted index will also change accordingly,because many foundations that actively follow the index passively adjust their positions,and traders will also adjust the buying and selling direction according to the new constituent stocks.,thereby causing fluctuations in the index price.

　　1.The stock index is a two-way trading mechanism

　　Although not every stock market supports shorting,when trading through stock index CFDs,you can flexibly choose to go long or short.When you are optimistic about the stock market of a certain country,you can choose to long the stock index to buy stocks in a certain market when the stock market price is expected to rise,and you can choose to short the stock index to sell stocks in a certain market when the stock market price is expected to fall.The profit and loss when trading CFDs mainly depends on the accuracy of the forecast and the overall volatility of the market.The mechanism of two-way shorting greatly increases the flexibility of trading,and it is easier to make profits in a highly volatile market.

　　2.The stock index has leverage

　　Stock index CFDs are leveraged products,which means that you only need to pay a small initial margin to obtain a larger proportion of market funds,usually a multiple of 100-200 times.Leverage is a double-edged sword.It can not only make the principal more profitable,but also may lose the principal.Therefore,when trading stock indexes,you should monitor your positions in real time,and set stop loss points and limit orders.Usually,when we trade a single stock index,we recommend that we only occupy a maximum of 10%of the total position,and try not to operate the full position as much as possible,leaving room for ourselves to face unexpected risks.

　　3.Stock indices can be used to hedge stocks

　　The original intention of the stock index development is to hedge against market risks.Since the stock index contract is a margin trading method and supports short selling,investors who hold stocks can hedge against the market decline by shorting the stock index and protect themselves when the stock market falls.reduce or avoid losses.Once the market continues to fall,the losses of stocks will magnify and the short positions of shorting the stock index will make profits,thereby offsetting the losses of individual stocks and even creating positive returns.On the contrary,when you short multiple constituent stocks of a stock index,you can also hedge against the risk of rising stock prices by going long on the stock index,and the profit from the stock index rise can offset the losses caused by shorting individual stocks.

　　The above is the introduction and trading precautions about the stock index.If you want to trade the index CFD(CDF)after the understanding,you can choose to open a real account in the mutual market first.Mutual Market is a trading platform with rich experience.It is double regulated by authoritative institutions AFSL and FSA.It is a trustworthy professional foreign exchange stock index investment manager,and the popular trading varieties cover the world.We provide the lowest spreads in the industry,ultra-low transaction fees,and one account can realize global investment.