{"id":9522,"date":"2020-08-27T14:42:00","date_gmt":"2020-08-27T18:42:00","guid":{"rendered":"https:\/\/ibkrcampus.eu\/trading-lessons\/what-is-an-index\/"},"modified":"2024-02-15T19:46:09","modified_gmt":"2024-02-15T19:46:09","slug":"what-is-an-index","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/","title":{"rendered":"What is an index?"},"content":{"rendered":"\n<h4 class=\"wp-block-heading\" id=\"h-what-is-an-index\">What is an index?<\/h4>\n\n\n\n<p>Generally speaking, an index is an indicator or measure of something. In simple terms, in the world of investing, an index is a hypothetical portfolio of securities designed to represent an asset class, market, or market segment.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-how-are-indexes-used\">How are indexes used?<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Indexes play an important and informative role at every step of the investment process. <\/li>\n\n\n\n<li>Economists use them to analyze economic trends.\n<ul class=\"wp-block-list\">\n<li><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Individual investors make decisions based on economists\u2019 outlooks.<\/li>\n\n\n\n<li>Institutional investors use indexes to conduct risk analysis, develop investment policies, and create asset allocation strategies.<\/li>\n\n\n\n<li>Nearly all types of investors use them to evaluate the performance of their investment portfolios.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p>Indexes are also used as a basis for investable products such as mutual funds or ETFs that allow for passive investment in a specific market, market segment, or asset class.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-how-are-index-constituents-chosen\">How are index constituents chosen?<\/h4>\n\n\n\n<p>To deliver an unbiased, complete view of a given market, the method by which an index\u2019s constituents are selected must be free of subjectivity, as the index should include all of the practical opportunities available in the market.<\/p>\n\n\n\n<p>An objective, rules-based formula for determining which companies become components of the index (as opposed to a hand-selected sample) is a critical component of the construction methodology of a truly representative index.<\/p>\n\n\n\n<p>For example, if an index designed to represent the large cap segment of a given market omits some of the large cap companies readily available to market participants, and that index is being used to define the basket of stocks from which an investment manager may select, the resulting large cap portfolio could be left without exposure to important drivers of the large cap market.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Main Goals:<br \/>\nUnderstand what an Index is; comprehend how indexes are used; and discover how index constituents are selected.<\/p>\n","protected":false},"author":899,"featured_media":9532,"parent":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"contributors-categories":[421],"traders-academy":[100,103,105],"class_list":{"0":"post-9522","1":"trading-lessons","2":"type-trading-lessons","3":"status-publish","4":"has-post-thumbnail","6":"contributors-categories-ftse-russell","7":"traders-academy-beginner-trading","8":"traders-academy-level","9":"traders-academy-trading-lesson"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Archives | Traders&#039; Academy | IBKR Campus<\/title>\n<meta name=\"description\" content=\"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/9522\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is an index?\" \/>\n<meta property=\"og:description\" content=\"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are selected.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus EU\" \/>\n<meta property=\"article:modified_time\" content=\"2024-02-15T19:46:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.interactivebrokers.eu\/campus\/wp-content\/uploads\/sites\/3\/2020\/08\/mqdefault-1.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"320\" \/>\n\t<meta property=\"og:image:height\" content=\"180\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\n\t    \"@context\": \"https:\\\/\\\/schema.org\",\n\t    \"@graph\": [\n\t        {\n\t            \"@type\": \"WebPage\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/\",\n\t            \"name\": \"What is an index? - IBKR Campus EU\",\n\t            \"isPartOf\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.eu\\\/campus\\\/#website\"\n\t            },\n\t            \"primaryImageOfPage\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/#primaryimage\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/#primaryimage\"\n\t            },\n\t            \"thumbnailUrl\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/3\\\/2020\\\/08\\\/mqdefault-1.jpeg\",\n\t            \"datePublished\": \"2020-08-27T18:42:00+00:00\",\n\t            \"dateModified\": \"2024-02-15T19:46:09+00:00\",\n\t            \"description\": \"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are selected.\",\n\t            \"breadcrumb\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/#breadcrumb\"\n\t            },\n\t            \"inLanguage\": \"en-US\",\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"ReadAction\",\n\t                    \"target\": [\n\t                        \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/\"\n\t                    ]\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"ImageObject\",\n\t            \"inLanguage\": \"en-US\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/#primaryimage\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/3\\\/2020\\\/08\\\/mqdefault-1.jpeg\",\n\t            \"contentUrl\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/3\\\/2020\\\/08\\\/mqdefault-1.jpeg\",\n\t            \"width\": 320,\n\t            \"height\": 180,\n\t            \"caption\": \"chart columns for presentation\"\n\t        },\n\t        {\n\t            \"@type\": \"BreadcrumbList\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/what-is-an-index\\\/#breadcrumb\",\n\t            \"itemListElement\": [\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 1,\n\t                    \"name\": \"Home\",\n\t                    \"item\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/\"\n\t                },\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 2,\n\t                    \"name\": \"Academy Lessons\",\n\t                    \"item\": \"https:\\\/\\\/www.interactivebrokers.eu\\\/campus\\\/trading-lessons\\\/\"\n\t                },\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 3,\n\t                    \"name\": \"What is an index?\"\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"WebSite\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.eu\\\/campus\\\/#website\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.eu\\\/campus\\\/\",\n\t            \"name\": \"IBKR Campus EU\",\n\t            \"description\": \"\",\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"SearchAction\",\n\t                    \"target\": {\n\t                        \"@type\": \"EntryPoint\",\n\t                        \"urlTemplate\": \"https:\\\/\\\/ibkrcampus.eu\\\/campus\\\/?s={search_term_string}\"\n\t                    },\n\t                    \"query-input\": {\n\t                        \"@type\": \"PropertyValueSpecification\",\n\t                        \"valueRequired\": true,\n\t                        \"valueName\": \"search_term_string\"\n\t                    }\n\t                }\n\t            ],\n\t            \"inLanguage\": \"en-US\"\n\t        }\n\t    ]\n\t}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Archives | Traders' Academy | IBKR Campus","description":"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/9522\/","og_locale":"en_US","og_type":"article","og_title":"What is an index?","og_description":"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are selected.","og_url":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/","og_site_name":"IBKR Campus EU","article_modified_time":"2024-02-15T19:46:09+00:00","og_image":[{"width":320,"height":180,"url":"https:\/\/www.interactivebrokers.eu\/campus\/wp-content\/uploads\/sites\/3\/2020\/08\/mqdefault-1.jpeg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/","url":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/","name":"What is an index? - IBKR Campus EU","isPartOf":{"@id":"https:\/\/ibkrcampus.eu\/campus\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/#primaryimage"},"image":{"@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/#primaryimage"},"thumbnailUrl":"https:\/\/www.interactivebrokers.eu\/campus\/wp-content\/uploads\/sites\/3\/2020\/08\/mqdefault-1.jpeg","datePublished":"2020-08-27T18:42:00+00:00","dateModified":"2024-02-15T19:46:09+00:00","description":"The Main Goals of this lesson are to help you understand what an Index is; comprehend how indexes are used; and discover how index constituents are selected.","breadcrumb":{"@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/#primaryimage","url":"https:\/\/www.interactivebrokers.eu\/campus\/wp-content\/uploads\/sites\/3\/2020\/08\/mqdefault-1.jpeg","contentUrl":"https:\/\/www.interactivebrokers.eu\/campus\/wp-content\/uploads\/sites\/3\/2020\/08\/mqdefault-1.jpeg","width":320,"height":180,"caption":"chart columns for presentation"},{"@type":"BreadcrumbList","@id":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/what-is-an-index\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.interactivebrokers.eu\/campus\/"},{"@type":"ListItem","position":2,"name":"Academy Lessons","item":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/"},{"@type":"ListItem","position":3,"name":"What is an index?"}]},{"@type":"WebSite","@id":"https:\/\/ibkrcampus.eu\/campus\/#website","url":"https:\/\/ibkrcampus.eu\/campus\/","name":"IBKR Campus EU","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ibkrcampus.eu\/campus\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/trading-lessons\/9522","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/trading-lessons"}],"about":[{"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/types\/trading-lessons"}],"author":[{"embeddable":true,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/users\/899"}],"replies":[{"embeddable":true,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/comments?post=9522"}],"version-history":[{"count":0,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/trading-lessons\/9522\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/media\/9532"}],"wp:attachment":[{"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/media?parent=9522"}],"wp:term":[{"taxonomy":"contributors-categories","embeddable":true,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/contributors-categories?post=9522"},{"taxonomy":"traders-academy","embeddable":true,"href":"https:\/\/ibkrcampus.eu\/campus\/wp-json\/wp\/v2\/traders-academy?post=9522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}