Commodities & indices · Beginner

What Are Stock Indices? An Overview

A 1-minute lesson from the MarketPro academy, one of 16 in commodities and indices.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

Short answer

A stock index tracks the combined performance of a defined group of company shares, giving a single number that represents the overall movement of that group rather than any one company. Indices are widely used as a shorthand for how a market or sector is performing as a whole.

How Indices Are Built

An index is defined by a specific set of criteria — such as company size, sector, or country — that determines which companies are included.
Most indices are periodically reviewed, with underperforming or ineligible companies replaced by others that meet the criteria.
Different indices can represent very different slices of the economy, from broad national markets to narrow sector-specific groupings.

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Not investment advice. Past performance is not indicative of future results.

Traders often use index-based instruments to gain exposure to a broad basket of companies through a single trade, rather than buying many individual shares separately. This can reduce the impact of any single company's performance on the overall position, though it does not eliminate exposure to sector-wide or market-wide risk.

Understanding what an index actually contains, and how it is weighted, is important context before trading it — two indices covering the same country's market can still behave quite differently depending on which sectors dominate their composition.

Step 7 of 10 on Stocks & Indices Basics

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Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

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Not investment advice. Past performance is not indicative of future results.