FTSE 100 Stock Index
FTSE - Financial Times Stock Exchange Market, FTSE 100 represents the Stock index of top 100 biggest companies in the UK that are listed in the London Stock Exchange Market. The calculation of this index incorporates stocks which are determined quarterly. These stocks included in FTSE 100 represent 80% of total market value of the London Stock Exchange Market listed corporations.
Because the FTSE 100 index tracks 100 companies the index will be more volatile as compared to an index such as the Germany DAX 30 which only tracks 30 companies.
The FTSE 100 Trade Chart
The FTSE 100 trade chart is displayed & shown above. On example above the index is named as UK100CASH. As a trader you want to find an online broker that provides this FTSE 100 trade chart so that you can start to trade it. Example displayed above is of FTSE 100 on the MT4 Forex and Platform.
Other Details about the FTSE 100 Index
Official Symbol - UKX:IND
The 100 components stocks which constitute FTSE 100 are chosen from the top United Kingdom companies. The FTSE 100 share stock index is closely followed as an indicator of the prosperity of UK businesses. The constituents that make up this index are re-evaluated quarterly. The calculation of this index is a simple formula based on market capitalization.
Strategy for Trading the FTSE 100 Stock Index
FTSE 100 shows the relative movement of the top 100 stocks in the UK. In general the share size of top 100 companies will keep heading upwards, therefore this index will also over time keep heading upwards. Should a company not meet the required growth targets, company will be removed from the index and replaced with an alternative company that has better growth prospects.
As a trader wanting to trade this index, general market direction at any given time will be more bullish than bearish. This is because as long as the 100 companies being tracked are doing good business, then their share value will keep heading upwards, & therefore this index will also keep heading in an upward trend.
As a trader you want to be biased & keep buying as the index moves up. When the UK economy is performing good (most of the times it's performing good) this upward trend is more likely to be in-favor. A good stock indices trade strategy would be to buy to keep buying the dips.
During Economic SlowDown and Recession
During economic slowdown & recession times, companies begin to report lower profits and lower growth prospect. It is due to this reason that investors start to sell stocks of companies reporting lower profits and hence the stock index tracking these particular stocks also will begin to move downwards.
Hence, during these times indices trends are likely to be heading downward & as a trader you should also adjust your strategy accordingly to suit the prevailing downwards trends of the stock market index that you are trading.
Contracts & Specifications
Margin Required Per Lot - £ 70
Value per Pip - £ 0.1
NB: Even though the general trend is generally moves upward, as a trader you've got to factor in the daily market volatility, on some days the stock index may move in a range or even pull back, stock market retracement might also be substantial at times and hence as a trader you need to time your entry precisely when using this strategy: stock indices strategy and at same time use proper equity management guidelines just in case of more unexpected volatility in the market movement. About equity management rules in index lessons: What is index equity management and stock index money management methods.
