Hi all,
I have some questions about trading a stock indexes like the SP500. I have searched but not really been able to find good answers so I hope some kind person here can shed a light.
The SP500 is basically just a Market Cap weighted snapshot of the various stocks that is included in the SP500. So it’s nothing in itself, just this mix of all the underlying stocks. You can trade this at various brookers, which makes me intererested in the mechanics.
Best regards
animap
I have some questions about trading a stock indexes like the SP500. I have searched but not really been able to find good answers so I hope some kind person here can shed a light.
The SP500 is basically just a Market Cap weighted snapshot of the various stocks that is included in the SP500. So it’s nothing in itself, just this mix of all the underlying stocks. You can trade this at various brookers, which makes me intererested in the mechanics.
- When someone makes a large purchase or sell in the SP500 index, can that affect the price of the index itself? Somehow I feel that it should not be possible, since the index value is only calculated by the value of the individual stocks. Or is the actual index (as bought by big players) actually representing a certain real amount of the underying stocks? In that case it should affect the price. If so; how big portion of a company’s stock belong to the index, and how big portion are single shares. Sorry if this sounds as a beginnier question, but I really do not understand how the feedback to the index itself works.
- Also depending on the result of question 1, how can there exist support and resistance levels on an index itself?
Best regards
animap