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What (STP) means
What Stocks are
What CFDs are
What Cryptocurrencies are
What Indices are
What Is a Commodity Market
How are stock market indices calculated?
Most stock market indices are calculated according to the market capitalisation of their component companies. This method gives greater weighting to larger cap companies, which means their performance will affect an index’s value more than lower cap companies. However, some popular indices – including the Dow Jones Industrial Average (DJIA) – are price-weighted. This method gives greater weighting to companies with higher share prices, meaning that changes in their values will have a greater effect on the current price of an index.