Exchanges & Indexes: Introduction

An exchange is a facility where traders can buy and sell securities, such as stocks or bonds and other financial instruments. Before the general accessibility of the Internet, exchanges were physical spaces where the traders bought and sold securities. Today, exchanges can be either a physical space or an electronic equivalent where securities are traded online.

In the United States, there are three major exchanges - The New York Stock Exchange, NASDAQ, and the Chicago Commodities Exchange.

An index, in relation to investing, is a method of tracking the performance of a set of equities, based on a certain criteria (such as an industry, or company size, or equity type). There are three major stock indexes in the United States - the Dow Jones Industrial Average; the NASDAQ composite index; and the Standard & Poor's 500.