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Investors often choose to use index investing over individual stock holdings in a diversified portfolio. Investing in a portfolio of index funds can be a good way to optimize returns while balancing risk. For example, investors seeking to build a balanced portfolio of U.S. stocks and bonds could choose to invest 50% of their funds in an S&P 500 ETF and 50% in a U.S. Aggregate Bond Index ETF.

A market index is a hypothetical portfolio of investment holdings that represents a segment of the financial market. The calculation of the index value comes from the prices of the underlying holdings. Some indexes have values based on market-cap weighting, revenue weighting, float weighting, and fundamental weighting. Weighting is a method of adjusting the individual impact of items in an index.

Advisory
We help advisory teams help their clients with comprehensive, independent analysis of the global macro and market environment. Our timely, rigorous and concise insight gives advisory teams greater confidence in providing M&A solutions to their clients.

Capital Markets
One step ahead in identifying market risk and opportunity. Our comprehensive analysis and extensive data resources give these teams greater confidence in identifying global macro and market risk and opportunity around origination and syndication.

Sales/Trading
Our timely, rigorous but concise insight means trading desks are always prepared for shifts in the global macro and market environment. By comprehensively supporting them as developments occur, we keep trading desks one step ahead in identifying market risk and opportunity.

Stock Index

What is forex trading?
What is forex trading and how does it work? Currency or foreign exchange trading – often known as FX – is trading pairs of currencies to try to potentially benefit from fluctuations in the exchange rates.

While assets such as stocks and commodities are traded on regulated central exchanges, currencies are bought and sold over the counter (OTC) – meaning that trades are conducted largely between institutional counterparties in major forex trading centres around the world. This is called the interbank market.

The biggest and the most liquid of these FX trading centres are London and New York. Tokyo, Hong Kong, Frankfurt and Singapore are also important currency trading centres.

About currency pairs

How does forex trading work? Forex investors trade currency pairs – sometimes called crosses for pairs that don’t include the US dollar – assessing when one currency is likely to rise against another.

Forex trading meaning presupposes buying one currency while selling another. Traders try to potentially profit by selling a currency at a higher value than when they had purchased it. A currency pair features a base currency and a quote currency.

The exchange rate represents how much of the quote currency is needed to buy one unit of the base currency.

Each currency is represented by a three-letter code, with the first two often referring to the country and the third referring to the currency – for example USD for the US dollar, CAD for Canadian dollar and NOK for Norwegian krone. There are exceptions, such as EUR for the euro and MXN for the Mexican peso.

The most frequently traded forex pairs include the euro against the US dollar (EUR/USD), the US dollar against the Japanese yen (USD/JPY) and the British pound against the US dollar (GBP/USD).