To understand how indices are calculated, you first need to understand how they are compiled. Each index needs its listed companies to perform well and be stable, so the overall performance of the index runs smoothly.

Organizations such as the Standard and Poor`s, the Financial Times Stock Exchange Group, and other indexes look at public records to learn about the health and growth of public companies.

Index prices fall and rise daily. The price of the index is calculated taking into account the value of the companies included in the index. Traders use Webtrader tools to identify possible movements in the price of the index and open the right position.

If you predict that Apple`s new announcement will affect the price of the tech index as the price rises, and enter a BUY position, you will profit if the price goes up, otherwise you will lose capital.