What are indices in financial markets?

Indices are groups of securities for leading firms' shares that have been grouped together for ease of use. Traders do not own the shares; instead, they trade CFDs on baskets such as the Dow Jones Index in the United States or the DAX40 in Germany. When trading indices, you can take a long or short position in the market. The shares of the larger companies in the bundle typically have the greatest impact on the pricing.