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Supply and Demand Zones

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I have found @elle's graphs very interesting so thanks Elle. One thing that is of particular interest are the supply and demand zones. I can understand this in terms of FX movements but I don't understand what is being bought and sold in terms of the indices prices. Is it just individual shares that are traded and hence that will move the total price of the indices?

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@Nelsy-Boy,  the indices are something of a derivative themselves and are calculated by a formula (not the same for each exchange) and set at a base date to track the collective fortunes of the constituent companies so that the index itself becomes an underlying. This allows derivatives of the index such as cfds and options to be traded on the rise and fall of the value of the index. Trading the index you in affect have a mixed portfolio of top companies which is updated over time as poor performers are dropped and replaced with new high performers.

 

 

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