<h2>EAFE Index: Definition and Explanation</h2>
<p>The EAFE Index, an acronym for <strong>Europe, Australasia, and the Far East</strong>, is a benchmark index that tracks the performance of international equity markets. It was developed by Morgan Stanley Capital International (MSCI) in 1969 and is widely used by investors and traders to gauge the performance of global markets outside of the United States.</p>

<h2>How It Works</h2>
<p>The EAFE Index consists of stocks from developed markets around the world, excluding the United States and Canada. It includes companies from 21 countries, with the largest allocations being to Japan, the United Kingdom, and Europe. The index is market-capitalization weighted, meaning that larger companies have a greater influence on the index's performance.</p>
<p>The EAFE Index is calculated in USD and is reviewed and updated semi-annually by MSCI. It serves as the basis for many international equity funds and exchange-traded funds (ETFs).</p>

<h2>Why It Matters for Traders</h2>
<p>For traders, the EAFE Index provides a useful tool for several reasons:</p>
<ul>
  <li><strong>Diversification</strong>: Tracking the EAFE Index can help traders identify opportunities for diversification in their portfolios, as it provides exposure to international markets.</li>
  <li><strong>Global Market Insights</strong>: The index offers insights into the performance of global markets, helping traders make informed decisions about their investments.</li>
  <li><strong>Benchmarking</strong>: The EAFE Index serves as a benchmark against which traders can compare the performance of their international equity investments.</li>
</ul>

<h2>Example</h2>
<p>For instance, a trader using the MetaTrader 5 platform at STB Provider might want to track the performance of the EAFE Index to decide whether to invest in international equities. If the EAFE Index is trending upward, the trader might choose to allocate more funds to international equity ETFs or individual stocks from the regions represented in the index.</p>

<h2>Key Takeaways</h2>
<ul>
  <li>The EAFE Index tracks the performance of international equity markets outside of the United States and Canada.</li>
  <li>It includes stocks from 21 developed markets and is market-capitalization weighted.</li>
  <li>For traders, the EAFE Index provides a tool for diversification, global market insights, and benchmarking.</li>
</ul>