Topic. 9: Types of trading strategies

The role of exchange stock indices can be reduced to three functions:
1) diagnostics;
1) Indicative;
3) speculative.

During the diagnostic function should understand the system's ability to characterize the index status and dynamics of the national economy as a whole and its individual components. Change mechanism exchange stock index is very simple - growth or decline in profitability instantly displayed on the quoted price of the respective shares, which in turn affects the level of stock index field.
Stock exchange index is a means of demonstrating pace of the market. They allow investors and traders to see trends that develop in the market and track the speed of these trends.
Thus, the ETFs are index system of economic monitoring of the national economy.
Performance indices indicative function implies that the presence of an objective assessment of the situation in the stock price stock market provides a benchmark for evaluating the behavior of large investment funds, individual investors and portfolio managers. Calculating the dynamics of the market value of the portfolio of shares for any period of time, investors can make informed decisions, as chosen strategy is effective (portfolio index higher / lower than the exchange of stock or is it) and make adjustments to their behavior in the market, if needed.
Function speculative exchange stock indexes manifested in their use as the underlying asset at the conclusion of futures contracts and purchase options. To capitalize on this market, you do not own securities, concluding term agreements by changing the index during the day or other short-term period. The main characteristic specifications futures contract or an option to exchange the stock index is that it's only financial instrument that is no underlying asset for delivery and only used as a settlement contract. At the heart of grommets or option on stock index is calculated in the base areas, and the contract value is determined by multiplying the number of points on their cost. 1 particular item can cost 10, 100, 500 currencies. In particular in Russia and Ukraine this base is 10 rubles and 10 hryvnia. The features and advantages of speculation in futures and options on stock indexes to guarantee a high level and the possibility of transactions through the use of Internet trading, distribution has become much scope in recent years and the domestic stock market exchange.