Trading on indices allows traders to speculate on whether an index will rise or fall. In this case, you can trade an index just as you would trade other commodities.
In order to make a profit, you, as a trader, can decide to ‘sell’ an index at a higher price than its initial ‘buy’ cost, or to ‘buy’ an index back at a lower price than the one you originally ‘sold’ it for.
Each share in an index contributes towards the calculation of its overall value, with the index rising or falling in value depending on the performance of its collective stocks.
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