What is the FTSE?
The FTSE 100 Index also commonly known as the “footsie” is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation. It is one of the most widely used stock indices and is seen as a gauge of business prosperity for business regulated by UK company law.
The index is maintained by the FTSE Group, a subsidiary of the London Stock Exchange Group which originated as a joint venture between the Financial Times and the London Stock Exchange. It is calculated in real time and published every 15 seconds when the market is open.
A Brief History
The index began on 3 January 1984 at the base level of 1000. The FTSE was affected adversely by the October 1987 crash of the US stock markets when it fell 12% on 20 October 1987. It also fell by 287 points following the 9/11 attacks. The FTSE experienced its highest point in 1999 when the dot-com boom was at its peak, with its value reaching 6950.6 on 30 December 1999.
The FTSE 100 consists of the largest 100 qualifying UK companies by full market value. The constituents of the index are determined quarterly, on the Wednesday after the first Friday of the month, in March, June, September and December. The values used to make the changes to the indices are taken at the close of business the night before the review.
FTSE 100 companies represent about 81% of the entire market capitalisation of the London Stock Exchange. The FTSE 100 is by far the most widely used UK stock market indicator. Other related indices are the FTSE 250 Index (which includes the next largest 250 companies after the FTSE 100), the FTSE 350 Index (which is the aggregation of the FTSE 100 and 250), FTSE SmallCap Index and FTSE Fledgling Index. The FTSE All-Share aggregates the FTSE 100, FTSE 250 and FTSE SmallCap.
Component companies must meet a number of requirements set out by the FTSE Group, including having a full listing on the London Stock Exchange with a GBP or Euro denominated price on the Stock Exchange Electronic Trading Service, and meeting certain tests on nationality, free float and liquidity.
Continuous trading on the London Stock Exchange starts at 08:00 and ends at 16:30 (when the closing auction starts), and closing values are taken at 16:35.
Trading the FTSE
The Financial Times Stock Exchange 100 Index can be traded as a binary option at Banc de Binary since it has an intraday volatility which can be traded on by binary options traders for profit.
Trading the FTSE requires some knowledge of the general market direction presenting an easier challenge than predicting the price direction of individual stocks. For example, debt concerns in the US and the European Union have pushed stock markets all over the globe in a downwards direction. A key feature in trading the FTSE as with any other indices is to know at which pull back points to get into the existing trend.
Trading the individual stocks on the FTSE requires more skill, especially when the market is in a general downtrend, therefore you need to understand the fundamentals of individual companies to know how to profit from them.