Trading FTSE 100
The FTSE 100 (Financial Times Stock Exchange), known better as the Footsie, is possibly the most popular and widely traded index on the stock market in the world today. How? This index represents 80% of the market capitalization within the London Stock Exchange (LSE). A Joint venture, the FTSE is co-owned by the London Stock Exchange and the Financial Times, and is the only index that is not part of any Stock exchange.
The FTSE 100 is a share index of 100 companies listed on the LSE, weighted by market capitalization and managed by the FTSE group. It is updated and published every 15 seconds.
A portion of the FTSE 100 is also made up of other global companies, and it is a mistake to use it as the only indicator of the state of the UK’s economy.
FTSE 100 History
The index entered the market on the 3rd of January 1984 at a base level of 1000 points. During the dot-com bubble in 2000, the index saw levels reaching 7,103.98. Thereafter the index saw a fall during the financial crisis of 2007-2010 to low levels that were below 3,500. Seven years later, in March of 2017, the highest intra-day value reached and recorded was 7,777.62.
FTSE 100 Index composition
The companies that make up the FTSE 100 are determined quarterly and formulated on the basis on their values, which are taken after the close of business the night before. Should companies not make a certain grade they will be excluded and replaced with a new constituent that has made the grade.
Top 10 companies represented by FTSE 100 and their index weighting (%)
|Royal Dutch Shell A||5.43%|
|Royal Dutch Shell B||4.89%|
|British American Tobacco||4.77%|
|Reckitt Benckiser Group||2.4%|
Factors that influence the FTSE index price
Although most of the composites are UK based, news, political and economic shifts, etc. that occur in Europe will have a consequence on the index. Announcements from the UK that affect the FTSE include Interest rate announcements, GDP statistics, UK manufacturing numbers and inflation rates.
While components of the Footsie may be made up of British companies (as mentioned) a lot of the FTSE’s revenue is generated from outside of the UK. Furthermore, the FTSE has 5 oil trading companies that are listed (BP, BG Group, Royal Dutch Shell, Petrofac and Tullow Oil), and their share values are mostly influenced by events that take place in the Middle East. Changes in the price of commodities are influenced by markets and world events, and this is important to keep in mind when trading the FTSE.
FTSE 100 Trading information
- The FTSE 100 futures contract is tradable from 7:01 – 19:59 (GMT), Monday to Friday
- The FTSE moves in increments of 0.50
- Margin trading allowed
- The minimum trade size is 0.1 index
- The currency of the FTSE is the British Pound
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