What is the term Index in Stock trading?

An index is a measure of an economy and in financial terms, it is a synthetic (imaginary) portfolio which aims to represent a specific market. As this is just a benchmark and aims to only represent the change in the value of an economy, the percentage change is usually the most important value (rather than the actual change in value).

Some of the best-known indices in the world are:

• S&P500
• FTSE100
• Dow Jones Industrial Average
• Nikkei