To understand what stock index trading is, we first have to have a brief understanding of what a stock and a stock index is. A Stock is basically the capital or essentially the basic setup money invested in setting up a business or a company.

A stock index or stock market index is a method by which a particular section of the stock market is measured, as opposed to a price of an asset such as Gold. Trading is basically the transaction of shares from one buyer to another or among multiple buyers in the stock market. In this case it needs to be explained that shares are nothing but the original stock which is divided into manageable chunks of capital.

Stock index trading is basically the trading of shares or stocks of different companies in the stock market. Stock indices are of two major types i.e. international stock market indices like S&P which cater to the stock trading of companies regardless of which nation it is domiciled in.
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The other type of stock index is the national index which is basically the stock index pertaining to an individual nation. This type of index keeps track of all companies based in that particular nation with respect to stock indices.

Trading in stocks take many forms, the most popular of which is day trading, the other types are automated trading, algorithmic trading, delivery trading etc. Without going into the intricacies of each, we will attempt to glimpse at the basic functioning of the most common type of trading .i.e. day trading.

Day trading is basically trading in stocks and shares during the day time functioning hours of the stock exchange, all trading in this method stops along with the closing time of the respective stock market daily. Usually day trading has remained the forte of financial experts and investment gurus, but of late with the advent of online trading, even users at home are at liberty to indulge in day trading with a reasonable amount of success.