You've likely come to this page because you tried to place an order that was not allowed. The reason your order was disallowed is that it was for an index.
An index is a statistical measure of change in an economy or a securities market. In the case of the stock market, an index is essentially an imaginary portfolio of stocks representing a particular market (or a portion of it). For example, two of the best known indexes for the stock market in the United States are the Dow Jones Industrial Average and the S&P 500 index. The reason we use indexes is to track the performance of the market. So, if you hear that the S&P 500 was up 5%, you know that the stock market (as represented by the S&P 500) was up around 5%.
Technically, you can't actually buy an index. After all, indexes really are nothing more than groupings of securities. Indexes don't trade on the stock market, they only represent the stock market. This might seem like we're splitting hairs, but it is important when you are investing. In order to invest in an index you must buy a security that attempts to match the returns of an index. For the average investor, there are two types of securities that do this: index mutual funds, and ETFs. (Derivative instruments such as futures and options also track indexes, but we're not going to cover them here.)
An index fund is a mutual fund that buys all the securities in particular index, so, to replicate its return. Since this game does not support mutual funds, index funds aren't of that much use to us in this situation.
An ETF is a special type of security that is like a mutual fund in that it represents a portfolio of securities, but trades like a stock. Similar to an index mutual fund, ETFs track the performance of indexes. Since there are literally hundreds of ETFs, just about any major index has an ETF that tracks it. So, to invest in an index, all you have to do is buy its associated ETF.
The following table shows the ETFs for some of the most popular indexes:
| Index Name | Ticker | ETF |
| S&P 500 Index | SPX.XO | SPY |
| Dow Jones Industrial Average | INDU.X | DIA |
| Nasdaq 100 Index | NDX.X | QQQ |
If you'd like to learn more on this subject, check out:
- Guide to Index Fund Investing - Get to know the most important market indexes, and the advantages and disadvantages of investing in them.
- Top ETFs - Learn how an exchange-traded fund gives you the benefits of a mutual fund and the flexibility of a stock.