Cash indices track and measure a particular group of related stocks. Since there are thousands of such stocks trading across the various exchanges, indices provide a window into the overall market sentiment and prove to be an effective tool to benchmark against individual stock portfolios. The advantage of trading cash indices over individual securities and commodities is the amount of exposure they provide to the entire industry. As an investor, you don’t need to conduct research on individual P&L statements and news reports of different companies. Depending on the market sentiment, all you have to do is take a short or long position. When traders invest in cash indices, instead of individual securities, the risk factor is considerably reduced, since the effect of a single company’s performance doesn’t influence the entire index. This suits the more risk-averse and long-term investor.