What are stock indixes?
Indexes group together the prices of selected stocks to form a single composite value, representing an entire market, a specific country or a specific sector. If the price of the majority of the selected stocks in the index rises, the price of the index itself will rise; conversely, if the price of the majority of stocks falls, the price of the index will also fall.

The main indices of world stock markets
1. Dow Jones Industrial Average (DJIA). It is price-weighted, so stocks with higher prices have a greater impact on its value.

2. S&P 500: This index includes the 500 largest companies listed on U.S. exchanges and is weighted by market capitalization. It is considered one of the best representatives of the US stock market and a barometer of the US economy.

3. Nasdaq Composite. It is also weighted by market capitalization and is often used to measure the performance of the technology sector.

4. FTSE 100: Here the investor has the opportunity to buy the 100 largest companies of the London Stock Exchange. More broadly, it is used to measure the state of the UK economy.

5. Nikkei 225: The Nikkei 225 represents the 225 largest companies listed on the Tokyo Stock Exchange, is in turn price weighted and serves as a key indicator of the performance of the Japanese economy.

6. DAX: The DAX index comprises the 40 largest German companies traded on the Frankfurt Stock Exchange. The ranking of companies is by capitalization and reflects the state of the German economy.


The benefits of investing in indices
Investing in stock indices offers many advantages, but also a few disadvantages. One of the main advantages is diversification, which means that buying a basket of different stocks reduces the risk associated with investing in just one company. In addition, most indexes have lower fees than actively managed funds, which means that investors can save on costs. This type of investing is also relatively simple and accessible to novice investors who may not have an in-depth knowledge of individual stocks. Last but not least, stock indices tend to rise in the long term and are also very liquid, easy to buy and sell.

Disadvantages associated with investing in indices
On the other hand, these investments are still subject to market fluctuations and can lose quite a lot of their value during downturns. Investors also do not have the ability to select specific stocks in the index, which can be disadvantageous if certain stocks in the index do not perform well. In addition, they are passively managed and thus do not benefit from active management by managers to achieve higher returns or mitigate the effects of corrections.

How to trade indexes?
Digitalisation has also affected the world of investing, which is progressing by leaps and bounds. Today, you no longer have to go anywhere and you can trade via the internet from the comfort of your own home on your computer, tablet or mobile phone. The first step is to create a trading account with a broker. Choosing a quality broker is very important, so it is a good idea to check the reviews of your chosen broker, the quality of their services and compare the amount of fees when trading. European brokers, including Ozios, are regulated by the strictest European authorities and provide clients with customer support 24 hours 5 days a week.
The second step is to open a trading account - filling in details, verifying identity and depositing funds for trading via wire transfer or credit card. The third step is the trading itself. If a web-based trading platform is also available, there is no need to download the trading platform. The best brokers allow investment in stock indices from all over the world, with trading mostly possible through CFDs, ETFs or futures. You choose the index you want to trade and open a trading position.

Conclusion
Equity indices are fundamental to understanding financial markets, providing investors with a way to track market trends, benchmark their portfolios and invest in broader market segments. By tracking these indices, they can also gain valuable insights into market dynamics to make better investment decisions.