Indices, the plural form of Index, are the representation of the value of a group of shares from a particular exchange. For example, the FTSE-100 represents the value of the 100 largest stocks traded on the Financial Times Stock Exchange (FTSE) in London.
Prices of Indices fluctuate as the value of the shares in the particular group change. For example, if the price of shares in the FTSE-100 rise, then the price of the FTSE-100 rises as well.
How much the price of an index would fluctuate as a particular share price fluctuate will depend on how the particular stock index is calculated and the weighting of the particular stock. Typically stock indices are calculated using either Capitalization Weighting or Price Weighting. In Capitalization Weighted indices, companies with higher market capitalization have more impact on the index price. In Price Weighted indices, companies with higher price have more impact on the index price.
The Nasdaq, for example, is a Capitalisation Weighted index, so companies like Apple, with higher market capitalization, have a greater impact on the price of the Nasdaq.
Since Indices are notional, trading these instruments can only be carried out with products that mirror their price fluctuations. On the Trade Fintech systems, Indices can be traded as CFDs.