What is FX indices trading?
An FX index is composed of 5 or 6 major pairs, and measures the strength of a particular currency against a collection of other major FX pairs.
The strength of the index is directly related to the price movements of these currency pairs. When that currency rises in price compared to the other currencies, the value of the index increases.
Currency values can be affected by many different factors that impact the health of a nation's economy, including inflation, interest rates, government debt levels and political stability.
Forex and FX indices investors often find the greatest volatility before and after key economic or political announcements as markets react to their potential impact.