FTSE 100 Spread Betting Guide
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The FTSE 100 is a weighted index of the 100 biggest, most capitalised, companies being traded on the London Stock Exchange (LSE).
These companies represent about 80 percent of the total value of the exchange. The rest of the companies combined make up the other 20 percent. As such, the price movement of the FTSE 100 index represents the general movement of the LSE quite well.
Many traders therefore prefer to trade the index rather than individual shares. While an individual share can sometimes have sharp and often unexpected price movements in a single day, the index is not usually so volatile. Unless a catastrophe hits the economy it is much less likely to show such extreme movements, although it will often see 1-2% moves on a given day.
FTSE 100 Spread Betting Guide
Spread betting is gaining popularity as a way of trading the FTSE 100. All you have to do is open a spread betting account with one of the many online spread betting companies, note that accounts are subject to status. The majority of firms even have free demo accounts and provide you with a free trading platform.
Using a demo account, you can start practising very quickly and get to know the spread betting markets before you risk a penny of your own money.
An extra advantage is that spread betting is not currently subject to Capital Gains Tax or Stamp Duty in the UK*. Consult your tax advisor for the situation in your particular country.
Spread betting is also a leveraged form of trading. That means you can make large profits in a short period of time, however, it also means that you can make large losses just as easily if the market goes against you.
Financial spread betting carries a high level of risk to your capital and you can incur losses that exceed your initial deposit. Ensure that it fits your trading requirements as it might not be appropriate for all classes of investor. Ensure that you only spread bet with money that you can afford to lose. Make sure that you are fully aware of all the risks and if necessary seek independent advice.
For a fully worked spread betting example see Spread Betting on the FTSE 100.
FTSE 100 Spread Betting Guide - Spread Betting Firms
All of the following companies offer spread betting on the FTSE 100 as well as a range of other stock market indices, commodities, forex and stocks and shares.
Stock Market Indices |
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| FTSE 100 Daily |
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| FTSE 100 Future |
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| Wall Street (Dow) Daily |
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| Wall Street (Dow) Future |
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| DAX 30 Daily |
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| DAX 30 Future |
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| S&P 500 Daily |
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| S&P 500 Future |
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| Other Indices |
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The above spread betting markets may also be available with other companies. Also see Comparison Table Notes.
FTSE 100 Spread Betting Guide - Charts
Most commentators would advise spending some time getting to know the different types of graphs and what they mean before speculating on the FTSE 100.
The so-called ‘candlestick’ chart is very popular with many traders. It shows the opening price, the closing price and the minimum and maximum price for the day.
Days during which the price increased are usually shown in a light colour, e.g. white, yellow or green, and days during which the price declined are then shown in a darker colour, e.g. black or red, also see:
A whole new field of study known as technical analysis has developed around such graphs and their interpretation. Many traders believe that certain patterns are an indication of future price movements, although there can be no certainty of that.
Another popular charting system is the Japanese developed Ichimoku Kinko Hyo. The core of the system is the so-called ‘cloud’, a dark area which indicates when the market is in an uncertain phase.
According to this system, if the price is trading above the cloud, the trend is bullish and if it is trading below the cloud the bears are winning.
FTSE 100 Spread Betting Guide - Stop Losses
If you are new to trading, or even an experienced spread bettor, you might find it useful to trade the FTSE 100 with a stop loss or even a guaranteed stop loss.
A guaranteed stop loss is an order to close your trade if the market moves against you by a pre-set amount. Note that not all stop losses are guaranteed.
"FTSE 100 Spread Betting Guide" last update by R Thomas, 01-Aug-2011
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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