FTSE Spread Betting Facts
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All financial markets can be affected by rumour, just ask HBOS who saw their share price drop 18% on unfounded hear say. If you are looking to trade the FTSE 100 what are the facts?
The FTSE - The Basics
- The FTSE 100 is designed to highlight the performance of the top 100 UK companies, where the companies are ranked by their market capitalisation. Note that the FTSE 250 is the next 250 UK companies, as ranked by their market capitalisation and that the FTSE 350 is the combination of the FTSE 100 and FTSE 250
- The FTSE 100 Index represents over 80% of UK market capitalisation
- The constituents that make up the FTSE 100 are updated every March, June, September and December. For example in June 2008, Alliance and Leicester, Tate and Lyle, Home Retail and Persimmon were dropped to the FTSE 250 and replaced by Drax, Invensys, Petrofac and Ferrexpo
FTSE Spread Betting Facts
- When spread betting on the FTSE 100 or 250 you trade in Pounds per point, Euros per point or Dollars per point
If you are betting £2 per point and the FTSE 100 moves by 70 points then your profit / loss would be £2 per point x 70 points = £140.
- Most spread betting companies let you trade at least two different types of FTSE 100 market
- A Daily FTSE 100 Market, aimed at Day Traders with narrow spreads
- A Futures Market where the FTSE is settled every quarter. Spreads on quarterly futures markets are often wider. Nevertheless quarterly markets can be better value than the Daily markets if you want to hold on to your bet for the short-medium term
- The typical ‘in hours’ spread size of the quarterly market is 4 to 6 points. The typical in hours spread for daily markets is 1 to 2 points
- Spread Betting companies often let you trade outside of market hours eg the Financial Spreads FTSE 100 markets open at 7am and close at 9pm
- You can get free FTSE 100 and 250 charts from most of the spread betting companies. Likewise, once you have an account your spread betting provider should give you free access to real-time prices. Note that some companies, particularly those outside the UK, refer to the FTSE 100 as the UK100. The FTSE 250 Index is likewise referred to as the UK250
- You can trade the FTSE 100, FTSE 250 and other indices tax free* and commission free with companies like Financial Spreads
- FTSE trading updates are listed on sites like CleanFinancial.com (morning and afternoon updates) and SpreadBets.org.uk (weekly review)
"FTSE Spread Betting Facts" written by RThomas, last updated 25-Aug-2008
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