Why is the FTSE 100 important to traders?
The Financial Times Stock Exchange 100 Index, otherwise known as the FTSE 100 Index, is a share index of the 100 companies listed on the London Stock Exchange that have the highest market capitalisation. The FTSE 100 is often seen as a gauge of the health of the UK economy The FTSE 100 represents roughly 81% of the value of the UK market on the London Stock Exchange.
FTSE 100 trading hours
The main trading hours for the FTSE 100 are between 08:00 and 17:00 (GMT).
How to trade the FTSE 100 CFD?
The FTSE 100 is one of the most popular and widely traded indices available on the market, providing volatility and liquidity. Like any stock index, the FTSE cannot be bought and sold like an equity. Instead, you can trade the FTSE 100 index today using contracts for difference (CFD). Trading the FTSE using CFDs allows you to take a long or short position without having to deal with an exchange.
How is the FTSE 100 calculated?
The FTSE 100 is comprised of 100 of the UK’s top companies by market capitalisation. The index is analysed and composed by the FTSE Group, a subsidiary of the London Stock Exchange.
Constituents of the FTSE 100 are decided on a quarterly basis – usually March, June, September and December. During this process, the companies’ market capitalisation is determined and it is decided whether or not the companies will be included in the index. As the fortunes of companies rise and fall within the FTSE 100, some companies will leave the index allowing others to join.
There are some requirements, aside from large market capitalisation to being considered. These include:
Having a full listing on the LSE
Meeting the standards for nationality and company liquidity
Ensuring a ‘free-float’ level of 20% (shares that are held by the general public)
Once the list of FTSE companies is set for the next quarter, the values of each company are then updated on the index every 15 seconds during trading hours.
Why trade the FTSE 100 with Capital.com
Advanced AI technology at its core: a Facebook-like newsfeed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos, articles, news to polish your investment strategy.
Trading on margin: providing trading on margin (20:1 for major indices), Capital.com gives you access to the FTSE 100 index using CFDs.
Trading the difference: by trading CFDs on the FTSE 100 index, you speculate on the rise or fall of its price. CFD trading is no different from traditional trading in terms of its associated strategies. A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives.
All-round trading analysis: the browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.
Focus on safety: Captal.com puts a special emphasis on safety. Licensed by CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.
Businesses on the FTSE 100
A list of the current companies included in the FTSE 100 index today, following the changes on 28 June 2018:
History of the FTSE 100
Launched in 1984 as a joint venture of the London Stock Exchange (LSE) and the Financial Times, the FTSE 100 is one of the oldest UK indices. In August 1997, the FTSE crossed the 5000-point barrier, and then peaked on 20 December 1999, during the dotcom bubble, at 6930.2; a record that held its place for the next 15 years. This was substantially driven by massive gains in telecommunications, media and technology companies. But the dotcom bubble began to unravel in the early 2000s, and by spring 2003, the FTSE 100 was back below 4000 points. On 22 May 2018, the FTSE 100 hit an all-time high of 7903.5 points, and closed that day at 7877.45.
Performance of the FTSE 100
See the FTSE 100 performance, historical data and chart below:
The FTSE 250 Index is a capitalisation-weighted index consisting of the 101 to 350 largest companies listed on the London Stock Exchange. It is operated by the same group that operate the FTSE 100 (FTSE Group). The FTSE 250 is regarded as a better indicator of the UK economy as more of its constituents derive their profits from the UK rather than internationally
The FTSE 100 is affected by a plethora of factors. The earnings reports of the stocks listed are one of the main driving factors of the index. Whether an earnings report is positive or negative can have dramatic effect on the price of a stock, and hence the index. Changes to specific industry sectors can also have a major effect on the index. For instance, when oil prices have been low in the past, oil-related sectors such as mining, construction and oil producers were dragged down, damping the FTSE 100.
Although most of the companies that make up the FTSE 100 are UK based, news, political and economic shifts that occur in Europe will have an affect on the index. This is because a lot of the FTSE constituents revenue is generated outside of the UK. For instance, the 5 oil companies listed in the FTSE can beinfluenced by events taking place in the Middle East. As well as this, like all UK macroeconomic indicators, UK inflation reports from the Bank of England, and changes in the interest rate, all affect the performance of the FTSE 100.
The FTSE 250 is a better indicator of the British economy than the FTSE 100 because the majority of FTSE 100 companies receive their revenue from overseas. So the FTSE 100 performance reflects global economic conditions more closely than UK economic conditions. The FTSE 250 firms, by contrast, receive a greater share of their revenues from the UK and hence the index is more reflective of UK economic conditions.
The FTSE All-Share Index is an aggregation of the: FTSE 100, FTSE 250 and FTSE SmallCap Index. It is a capitalisation-weighted index comprising of around 600 companies.