In this brief guide to spread betting on the FTSE 100, we will first explain what the index is, then set out the advantages of trading the FTSE 100 and finally explain how to trade it.
The FTSE 100 is a weighted stock market index of the share prices of the 100 most capitalised companies trading on the London Stock Exchange (LSE). As such it represents approximately 80% of the total value of the LSE.
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The FTSE 100 is, under normal circumstances, much less volatile than the prices of some individual stocks. This is one of the reasons many novice traders prefer to trade this index rather than individual company shares.
High risk forex day trading graphs
The price of an individual share can move 10 to 15% during a single day in response to an unexpected incident, e.g. the killing of a key employee, a new product range being launched or a takeover offer. On the other hand, the FTSE 100 index is usually considered to become more stable, although often moves between 1 and 2 per cent in a day.
Many traders therefore prefer to trade the index rather than individual shares. While an individual share can sometimes have sharp and often unexpected price movements in one day, the index isn’t usually so volatile. Unless a catastrophe hits the economy it is far less likely to show such extreme movements, although it will often see 1-2% moves on a given day.
Risk in Forex Investment?Risk in Forex Investment?
Forex is a highly volatile market and predicting its movements can be impossible at times. No one can predict entirely how the market will move? That is the main reason why it has a high speculation rate to it. Definitely if you go buy studying the past trends and patterns of the market, you can still make out roughly about the market movements, but certainty is not possible. Fluctuations in the currency exchange prices or rates can affect your trade or deals. The market can move in favor or against you any time, resulting in possible profit or loss. Frauds or Scams Forex is a highly potential market for frauds and scam artists. Although the market is significantly safer and cleaner to trade now, than it was a few years ago, care should still be taken while dealing with a broker. Always check the documents before signing any contract and read the terms and conditions fully. Being vigilant is the key to safe trading. Also, always prefer to deal with professional brokers who are attached to reputed financial firms and banks. Also, registered brokers such as those listed with the Commodities Futures Trading Commission or the National Futures Association should be preferred. Also, beware of any brokers or financial firms offering too good schemes or deals, with very low or no risk trading guarantees. The brokers claiming to offer higher returns should also be thoroughly checked before signing up with them and starting to trade. All the above mentioned risks can be avoided by keeping into consideration that any of this can happen to you while trading. Keeping this in mind will keep you prepared about the consequences that you can face and hence, help you make wiser and informed trading decisions. Although we know by now that Forex is a risky business, there are a few measures, which have been created to limit, if not completely stop, a trader’s financial risks. Firstly, every investor should try and develop his/her own trading strategy. Be it technical, fundamental, or both, every trader needs to follow a strategy which logically backs the trading decisions that he is making. All the market trading should be done using the money which you can afford to lose, not affecting your home finances, in case the market decides to go against you. Also clearly mark your entry and exit points with every deal you make. Along with the entry and exit points, a trader also needs to posses thorough knowledge about the past trends of the market. How to make graphs, how to study the financial graphs and how to read, understand and aptly interpret the indicators and chart movements correctly is very important. There is a huge amount of information available easily these days on this 24 hour market, but what needs to be taken into consideration is the information which is relevant, to our trade.
High Risk Investment Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. but you must Management Risk.
Risk is something that will always stand beside any investments. Although, in forex all the risks you're taking depend on you. The most common rule is trading with money you can afford to loose. Another thing is not risking over 2% of your account per trade. Setting up the daily and weekly loss limits will help you to prevent considerable losses. The main thong is to do the calculation every time before start trading.
You can of course invest in all the shares that are part of the FTSE 100. However, for many traders a derivative product like spread betting or CFDs can be a simpler option.
To trade the FTSE 100 via spread betting, you’ll need an account with a spread betting company. These spread betting accounts are often free to open, although subject to status, terms and conditions. Several firms also have demo accounts where you can trade under real life circumstances without actually risking any money.
Spread betting is gaining popularity as a means of trading the FTSE 100. All you got to do is open a spread betting account with one of several online spread betting companies, note that accounts are subject to status. The majority of firms even have free demo accounts and provide you with a free trading platform.
Use of a demo account can help you become more familiar with what technical and fundamental factors affect your chosen markets.
It is equally important for investors to gain access to decent trading platform that can import live prices and display graphs of price movements and technical indicators. Most spread betting companies will provide access to such trading platforms free of charge to their account holders.
One advantage of trading the FTSE 100 with spread betting is that normal market hours are between 08:00 and 16:30, London time, five days a week. Several spread betting firms, like ETX Capital, provide out of hours trading on key markets, like the FTSE 100 and other popular stock market indices, forex and commodities.
Financial spread betting is a geared investment product, it involves a high degree of risk to your capital and can give rise to losses that are more important than your investment. Please ensure that spread betting fits your trading objectives as it mightn’t be appropriate for all classes of investor. Ensure that you only speculate with capital you can afford to lose. Before you trade, ensure you fully appreciate the risk and seek independent advice where required.