Stock market index
A stock index tracks the performance of a basket of shares, such as the S&P 500, the Nasdaq 100, the FTSE 100, the DAX or the CAC 40.
An index sums up how a group of companies is doing. The CAC 40 holds 40 large French stocks, the DAX 40 German stocks and the S&P 500 about 500 large US companies. Most are weighted by market capitalisation.
The DAX is a total return index: it includes reinvested dividends, unlike the CAC 40, which is a price index.
You can't buy an index directly: you go through an ETF, a future or a CFD. Under ESMA and FCA rules, major indices (including the CAC 40, DAX, S&P 500 and Nasdaq 100) carry maximum retail leverage of 20:1, and other indices 10:1.