ftse trading strategy spread betting

What is the FTSE 100 and how can you trade it?

This article covers some key details you need to know about the FTSE 100 index, which is a benchmark for the UK's stock exchange. Learn how you can get engaged with FTSE trading, which can involve speculating on products that are based on the FTSE 100 index, including trading on derivatives and exchange-traded cash in hand (ETFs).

What is the FTSE 100 index?

The FTSE 100 stock index measures the top side 100 companies listed on the London Stock Switch over (LSE) with the highest market capitalisations. Nicknamed the "footsie", it's one of the top stock indices in the world and is equal to the Sdanamp;P 500 in the US or Nikkei 225 in Japan. These all symbolize a benchmark for their country's descent interchange.

Large-cap stocks are ofttimes attractive to traders, given their comparatively reliable and stable hard cash flows, balance sheets and reputation, along with the power to reward investors with dividend payouts. For this reason, the FTSE 100 is one and only of the most best-selling indices that's invested in worldwide.

FTSE performance

Companies that are listed on the FTSE 100 induce some of the largest market capitalisations in the world and are leadership within their single industries. Altogether, the index is valuable at approximately £1.96tn As of November 2022, reported to the London Regular Commute. This highlights the order of magnitude of the index, on with its share price, which can rise along with its valuation.

Tilt of companies happening the FTSE 100

The FTSE 100 index covers completely sectors of the stock exchange. Particularly, it features leading companies inside the healthcare, technology, retail, consumer goods and push sectors. Pharmaceutical stocks are a notable subscriber to the FTSE 100, besides as raw material suppliers, so much as oil, gas and mining stocks. Down the stairs are some examples of the biggest FTSE 100 companies in the Great Britain by market capitalisation, reported to their industry.

Healthcare:

AstraZeneca
GlaxoSmithKline

Oil color danAMP; Gas pedal:

BP
House Dutch Shell

Finance:

Hargreaves Lansdown
Barclays

Mining:

Rio Tinto
BHp

Consumer Goods:

British people North American country Tobacco plant
Unilever

Aerospace:

BAE Systems
Rolls-Royce

What are thedannbsp;FTSE trading hours?

FTSE 100 trading hours unremarkably depend on the ancestry market trading hours for the Capital of the United Kingdom Stock market, which are between 08.00 and 16.30. All the same, trading hours also devolve on for each one individual broker, as many offer FTSE weekend trading.

Some brokers also offer futures (operating theater forward contracts). These are agreements between a buyer and marketer to trade the asset at a future date and price, allowing you to speculate connected the price of the line of descent index ended the comeback (OTC), rather than direct an exchange. Victimization forward contracts, you are able to trade outside of LSE hours.

How to trade the FTSE 100

The FTSE 100 is a stock index which backside't be invested with in directly. Therefore, traders can alternatively speculate connected instruments that are supported FTSE 100 constituents away trading on derivative instrument products, such as spread bets and CFDs. Another way to get complex with the index is to buy exchange-traded funds directly (which cannot be done with CMC Markets) or trade connected ETFs that are based on the FTSE. We explain these options in more particular below, and which you can and cannot do with CMC Markets.

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Investing in exchange-traded funds

FTSE ETFs are index pecuniary resource that are comprised of the same 100 constituents as the FTSE 100. Exchange-traded funds work in the same right smart as shares and can be bought and sold on a stock central. Past closely trailing the prices of the forefinger, this type of product gives investors exposure to the implicit asset. Some nonclassical FTSE ETFs include the following:

iShares Core FTSE 100 UCITS ETF (ISF)
Vanguard FTSE 100 UCITS ETF (VUKE)
HSBC FTSE 100 UCITS ETF (HUKX)

Exchange-traded pecuniary resource can be a cost-effective way to gain exposure to a large number of constituents and this likewise helps to spread risk and diversify your trading portfolio.

What are or s FTSE trading strategies?

Many investors tend to buy FTSE ETFs outright or trade the FTSE 100 in the long term, which is known as a buy and go for strategy. This is because the index is notable for being slightly more sound, in comparison with other more evaporable assets, and these types of stocks can more often than not provide profitable returns over a longer period of time.

However, some traders prefer to stick with breakable-term strategies that can be used when trading the FTSE 100, much as:

Day trading: this strategy involves traders dipping in and out of the market to try and capitalise of very small only frequent price fluctuations and closing out their positions at the end of each day with the aim of devising a profit.
Price action trading: traders can read and interpret price natural process on a trading chart. Although the FTSE is known for having slightly inferior inside unpredictability than others, it send away still fluctuate chop-chop in terms due to external events, so much equally the political and economic instability of the country. Successively, this could have an effect on the total index number's value, regardless of how many assets there are to offset the decline of a large constituent's performance.
Swing trading: this medium-term strategy involves taking a buy position for a number of days or weeks before marketing the asset, capturing its swing in price. It aims to take advantage of securities industry fluctuations as the damage fluctuates 'tween an overbought and oversold state.

Regardless of the product that an investor or trader chooses in order of magnitude to access the FTSE, they should always consult their risk-management scheme before opening whatsoever positions.

How to barter on our UK 100 instrument (supported the FTSE 100)

At CMC Markets, we offer a range of spread sporting and CFD (contracts for difference) derivative products that allow you to speculate on the damage movements of financial assets without taking possession.

Spread sporting

Spread betting allows you to trade tax-unblock* on derivative products that are supported the FTSE 100 index without taking possession. This means that you can go long or short on the position when needful. If you imagine that the value of the FTSE-founded instrument is going away to move up, you could buy or go long, and if you think that the value of the official document is releas to fall, you could sell or conk short.

CFDs

CFD trading is other typecast of derivative trading that does not involve taking direct ownership of the asset. A CFD is an concord to exchange the difference of opinion in price of an plus betwixt the opening and close of a contract. Patc gap bets are calculated using a stake size, CFDs are measured in units. For every point the instrument moves in your favour, you profit past a multiple of CFD units that you have bought or sold, or for every guide the instrument moves against you, you make a loss.

For example, our UK 100 – Cash cartesian product is a differential supported the FTSE 100 index. You can trade thereon by following the steps at a lower place:

Loose an account. You will automatically be granted access to a gamble-free demo account where you can practise your strategies first.
Choose your product. We offer a range of differential products for trading via spread card-playing and CFDs.
Explore the product library. Search for our UK 100 – Cash instrument, which is based upon the FTSE 100.
Use risk of exposure-management tools. For instance, many traders choose to use stop-deprivation orders to prevent losses as far as possible.
Decide connected a strategy. Our derivative products allow you to take both sides of the market, thus you throne open long or short positions.

Example of spread betting the UK 100

Let's say that you wanted to go long along our UK 100 instrument because you believe that the price of the FTSE index is rising, and this may be reflected in our legal instrument's cost. The following information is confiscated from our Side by side Generation platform:

Sell price = 7214
Buy price = 7215
Ranch = 1
Margin rate = 5%

You could make over a buy market order at £5 per dot. In line with the margin rate for the UK 100, you entirely need to deposit 5% of the full trade economic value, so this calculation will glucinium (5% x (£5 x 7215)) = £1803.75.

Let's enjoin that your prediction was correct and the value of the index increases over a period. As the UK 100 is based upon the FTSE, the derivative therefore reflects this growth to reach a new buy price of 7231 and sell cost of 7230. You make up one's mind to close out your position at the new sell price. As you opened a long position at 7215 and closed come out of the closet at 7230, the price has moved 15 points in your favour. Your profit will be this figure multiplied past the interest size up, so 15 x £5 = £75.

If the market moves against you, you can calculate losings in the exact same way as profits, by multiplying your stake size by the routine of points that the index has dropped by.

Counterpane dissipated is a leveraged product, which means that you could realize a gain if the market moves in your favour, but if the grocery moves against your position, this leave result in equally monumental losses. Consult our guide to leverage in trading for more info.

If you were to have taken the same position exploitation contracts for difference (CFDs), unrivalled difference would represent that your stake size is instead plumbed in units. Therefore, the equal of a £5 stake size would be to buy 5 units of the UK 100 instrument. Your profit (or loss) keister be deliberate by multiplying the number of CFD units by how umpteen points the instrument has emotional in your favour (Oregon against you). Another difference of opinion between spread betting and CFD trading is how they are priced.

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At CMC Markets, we offer out-of-hours trading happening favourites like the UK 100 24 hours 5 years a calendar week (bar a 1hr break at 22:00), and then you don't have to stop when the markets do. Translate more details nearly market hours, margin rates and spreads on our legal instrument varlet for GB 100 – Cash.

*Tax treatment depends on individual circumstances and can transfer operating theatre may differ in a legal power other than the Great Britain.
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CMC Markets is an execution-only service provider. The material (whether or not it states whatever opinions) is for common selective information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should atomic number 4 well-advised to be) financial, investment operating theater otherwise advice along which reliance should Be placed. No opinion disposed in the material constitutes a recommendation by CMC Markets operating room the writer that whatsoever particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in conformity with legal requirements designed to kick upstairs the independence of investment research. Although we are non specifically prevented from dealing before providing this crucial, we do not seek to ask advantage of the crucial prior to its dissemination.