Spread Betting FTSE

I am sure that you have heard of the FTSE (often called “Footsie”), and wondered what those bankers are up to when they play with it. In fact, there are several FTSEs, and they are each a measure of how well the London stock market is doing.

A trading account permit you to buy or sell a range of different markets. So let’s take the FTSE 100 index as an example. If you bet £10 per point that the FTSE 100 index will rise, and it gains 30 points, you make £300 (£10 x 30 points). The more the market moves in the direction of your trade, the more you make, sometimes with truly fantastic gains. But beware – the opposite also holds true. If, say the Footsie falls 50 points, you’ll be looking at a £500 (£10 x 50 points) loss.

For instance, if the FTSE 100 index was quoted at 5,326 to 5,327 and you believed it was going to rise you could buy it at the offer price of 5,327. Betting a pound a point would imply that if the market went up to 5,600 – 5,601 you could close out at the bid of 5,600 for a profit of £273.

Of course it is also easy to sell short to profit from market declines. If you had sold the spread at 5,326 and the market then dropped to 5,200 to 5,201 you could have closed the trade for a gain of 125.

You can find the FTSE 350, which is a market index of the largest 350 companies in the London Stock Exchange, the FTSE 250 which covers the bottom 250 of that list, and the main one, the FTSE 100 which is the top 100, the largest companies listed on the exchange and over 80% of the stock market value. The index is usually shortened to simply FTSE. There are several other indices listed by the market, but these are the main ones.

If the FTSE goes up, it means that the value of the shares of the top 100 companies has gone up, on average, which is seen as a good sign for the economy in general. It is a much better indication than looking at individual companies stocks and how well they are performing.

If you like to look at the big picture, and don’t have the time or inclination to follow individual stocks, then you can make money spread betting the FTSE. Even better, you can make money whether the FTSE is going up or down, just as long as you can decide in advance which is going to happen. You don’t have to pick or own any investments if you use FTSE spread betting for your trading plan.

The way it works is easy to understand. To make money spread betting FTSE values you first need an account with a spread betting provider, and there are many of these companies operating online. Then you simply place a bet, deciding which way you think the index will go. Because it is so straightforward, spread betting is one of the fastest growing methods of financial trading.

An example will show you how FTSE spread betting works. If you think that the FTSE is going up, then you “buy” or “go long” on the index; if you think it is going down, then you “sell” or “go short”. Your spread betting provider will quote you two prices on the FTSE, one for buying and one for selling, and the difference between them is the “spread”, which is what pays the provider for taking your bet.

Say your spread betting company quoted you 5201/5203. The first number is the selling price, and the second number is for buying. You can choose how much you want to bet, and £1 per point is a common value. If you think the index is going up, you could “buy” at £1 per point at a price of 5203. If the index goes up and is quoted at 5278/5280 a little later, you could close your wager by effectively “selling” at £1 per point, which would be at 5278. Your gain would be 5278 minus 5203, which is 75 points, for which your bet would pay you £75.

All spread trades are leveraged. So if the margin required to open a trade on the FTSE 100 might just be 0.75% of the market exposure. So a pound-a-point spreadbet with the index trading at 5,500 would only need GBP42 to open the position. Of course the main advantage of leverage is that is amplifies potential gains – if the FTSE were to rise 2%, the 110 point gain would be equivalent to a ROI of 262% on your original capital outlay. But this cuts both ways so it is essential that you have spare capital to cover any losses.

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Do you know what the FTSE is? This is a common abbreviation for the Financial Times and Stock Exchange index of the top 100 capitalized companies in the UK. The numbers given in any FTSE spread betting quote tend to reflect an individual business’ prosperity, but the value of the overall index is looked at in much the same way that the American Stock Exchange numbers are viewed.

Interestingly enough, the FTSE is an index that is often looked at by those interested in financial market spread betting. This is a very interesting way to earn money from the financial markets because it doesn’t actually involve any investment activities at all.

How does it work? Well, if we use the FTSE financial spread betting systems as the only example it will be quite easy to explain. Because this is an index, the numeric value of it will fluctuate up and down according to the health of the markets. If someone is fairly well-informed about current market patterns they could stake a wager on the direction of the FTSE (up or down) and make some good profits from an accurate prediction.

This is a very popular activity in the UK, and the number of agencies qualified to provide services have multiplied rapidly in the past decade. They can now take orders via the telephone or instantly over the Internet – which is excellent news for those who understand how rapidly conditions can change in a single day.

How exactly would a financial market spread bet work? Well, a trader could decide to “buy” or “sell”, which basically indicates which direction they think the index will go. A buyer believes the direction is up, while the seller views the index as an issue which will drop in value. All traders are issued a quote from their spread betting company that is a prediction of the numeric value for a specific period of time. The difference between the buy and sell numbers is the “spread”.

The trader must decide what they will wager on the spread, which is usually determined on a per point basis. So, a wager could reasonably be a pound per point in either direction. What this really means is that someone could participate in the markets and make a profit even when they are declining, so long as they predict this and make a selling wager.