Indices measure the performance of a group of stocks, which is usually an indicator and reflection of how the economy of a country is doing. You can’t buy the index itself; it is information and a way to track the top companies within that index.
For example, the S&P 500 tracks the 500 largest companies on US stock exchanges. NASDAQ Composite specialises in the biggest technology companies in the world.
CFD, or 'contract for difference', is a financial derivative that allows traders to speculate on the price movements of an underlying asset, such as an index. It’s an agreement between two parties to exchange the difference in the value of an asset from the time the contract is opened to when it is closed.
When trading CFDs on indices, you can speculate on whether the price of the index will go up or down, providing opportunities to profit in both directions.
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