Stock market is the place (physical or virtual) where shares of companies are issued, bought and sold. The most important role that the stock market plays is that it determines the price at which these shares can be traded i.e. a price at which a buyer is willing to buy and a seller is willing to sell. The movements in the overall stock market i.e. the reds and the greens represent the change in the price of the shares from its last trading session a green indicates an upward movement – an increase in price while the red means the opposite. The movement of the overall market is tracked by the movement in the price of the index say NASDAQ, NYSE, S&P etc. So basically you can consider a stock market as say a fruit market supposedly you are willing to buy bananas by selling oranges; you go to this place meet a buyer of oranges agree upon a price, take the money go to the seller of bananas give the money and go home have a tasty banana shake that simple. So where does this index fit in our example. You can say that this index is the price of an entire fruit plate. While the cost of your fruit plate will be calculated using the weight proportion of each fruit in the plate, the index will be calculated using the market capitalization of each share forming the part of the index. You are now officially the Cub of Wall Street.