Indexes, bull markets and bear markets

Explain what an index like the S&P/ASX 200 measures, and why one big company can move it. Free lesson 12 of 13 in Tickfloor's course, no card needed.

What an index is

An index is a basket with rules. It says who is in it and how much each member counts toward the whole. When someone says ‘the ASX fell 1%’, they mean one specific index fell. The ASX has several indexes, and the S&P/ASX 200 is the main one.

Each company in the index gets a weight. A bigger company counts for more. When the price of a company in the index moves, it pulls the index in that direction by an amount equal to its weight times its own move.

General information only. It doesn't consider your objectives, finances or needs.

Open the full interactive lesson (14 minutes), or see the whole free course.

More free lessons: Liquidity: why some things cost more to trade, What is trading?, Market, limit and stop orders, in plain English.