How to trade the FTSE 100
The FTSE 100 – the UK’s most popular index – offers plenty of opportunities for traders. Learn how to get exposure to FTSE 100 price movements with cash indices and index futures, as well as ETFs and individual shares.
Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.
Contact us: +44 (20) 7633 5430
Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.
Contact us: +44 (20) 7633 5430
If you’re ready to open a position on the FTSE 100, follow these three steps:
1. Decide how you’d like to trade the index
There are several ways to get exposure to the FTSE 100 – trading in ETFs and individual shares, or trading on the index’s value.
2. Create a trading plan
Before taking a position on the FTSE 100, you'll need to decide whether you're a short- or long-term trader – and how you're going to manage your risk.
3. Open a live account
Create and fund your CFD trading account – start by filling in our simple application form.
To help you decide how to trade in the FTSE 100, we explain each method in detail below.
How can you trade the FTSE 100?
With us, there are a number of ways to get exposure to the FTSE 100. You can:
When trading the FTSE 100, you’ll do so using CFDs. CFDs are financial derivatives, which means that you never take ownership of any underlying assets.
Instead, you’ll speculate exclusively on the underlying asset’s price movements – in this case, either fluctuations in the index level of the FTSE 100, or movements in the prices of FTSE 100 ETFs or shares.
But, please bear in mind that all trading incurs risk. Before trading, you should always understand the risks involved, and consider whether you can afford the potential monetary losses.
Trade the FTSE 100 index directly
- Access the performance of the UK’s largest 100 companies from a single position
- Trade on the index’s price (ie its level) directly using CFDs
- Get exposure to the index in a market with high liquidity
- Go either ‘long’ (if you think the price will rise) or ‘short’ (if you think the price will fall)
- Trade commission free with CFDs as charges are included in the spread
- Choose our FTSE 100 ‘cash’ (spot) market to take a position in the short term
- Choose our FTSE 100 futures or options markets to take a position - you’ll do so using CFDs
- Trade 24/7 (except from 6am to 4pm on Saturdays and 6.40am to 7am on Mondays, UTC +8)*
*Our trading hours are based on UK GMT hours, and are converted to UTC+8 hours. This means that the times listed are affected by UK clock changes in the year, and will be adjusted by +/- 1 hour accordingly.
Trade FTSE 100 ETFs
- Take a position on the price of the ETF – calculated using the fund’s net asset value (NAV) – rather than on the current index level of the FTSE 100
- Take a position on FTSE 100 ETF price movements with CFD trading without owning the underlying asset
- Use CFDs to go long or short on your position
|
Trading the FTSE 100 index directly |
Trading a FTSE 100 ETF |
Trading in FTSE 100 shares |
Account types |
CFD trading account. |
CFD trading account. |
CFD trading account. |
Market hours |
24/7 (except from 6am to 4pm Saturdays and 6.40am to 7am Mondays, UTC+8).* Please note that our Weekend UK 100 market is separate from the main FTSE 100 market. |
Trade UK-listed FTSE ETFs when the LSE is open - 4pm to 12.30am, Monday to Thursday and 4pm Friday to 12.30am Saturday (UTC+8).* |
When the LSE is open - 4pm to 12.30am, Monday to Thursday and 4pm Friday to 12.30am Saturday (UTC+8).* |
Timeframe |
Short to medium term for trading. |
Short to medium term for trading. |
Short to medium term for trading. |
Liquidity and execution |
0,0107 second execution speed and unique deep liquidity.1 |
Higher liquidity offered by trading the index directly. |
Higher liquidity offered by trading the index directly. |
Costs |
Cash (spot) trading incurs overnight fees, but none for index futures. |
Min commission £10 for CFD ETFs. |
Min commission £10 for CFD shares. |
*Our trading hours are based on UK GMT hours and are converted to UTC+8 hours. This means that the times listed are affected by UK clock changes in the year, and will be adjusted by +/- 1 hour accordingly.
Open your CFD trading account
With a CFD trading account, you can enter and exit positions on the FTSE 100 quickly in highly liquid markets.
Because CFDs are derivatives, you can speculate on both rising and falling prices by going ‘long’ or ‘short’. Importantly, our derivatives enable you to trade the FTSE 100 index directly. This gives you exposure to the performance of the UK’s top 100 stocks from a single point of entry.
CFDs are leveraged, so you can open a trade by depositing only a fraction of the total value of your position. But, because your total exposure is greater than the deposit (known as ‘margin’), your losses could substantially outweigh this initial amount. When trading with leverage, it’s vital to take steps to manage your risk.
Take your FTSE 100 trading position
How you’ll do this depends on the type of trade you’ve decided to open:
Trading CFDs on the FTSE 100
A contract for difference, or CFD, is an agreement to exchange the difference in price of an underlying asset, as measured from the time the contract is opened until the time it’s closed.
For example, you believe that the FTSE 100 is set to rise from its current level of 7000. So, you buy a FTSE 100 CFD worth $10 per point. Your forecast is correct, and you close your position when the market reaches a sell price of 7100. The difference is 100 points, so your profit is $1000 – excluding other costs.
If, however, the market had moved against you, and you closed at a level of 6900, your loss would be $1000 – excluding other costs.
Trading CFDs on FTSE 100 cash indices
This is the most direct way to access the performance of the FTSE 100 with us. Trade at the current market price and receive tight spreads. But, if you’d like to hold your position open overnight – or for a longer period – consider trading CFD futures or options as our cash (spot) CFDs incur overnight funding fees if you hold your position open after 10pm UK time.2
Our out-of-hours and weekend offering enables you to trade the FTSE 100 almost 24/7 (except from 6am to 4pm on Saturdays and 6.40am to 7am on Mondays, UTC +8)* Your weekend positions are automatically rolled over to a weekday position, but you’ll have to open any weekend positions separately from your weekday trades.
*Our trading hours are based on UK GMT hours, and are converted to UTC+8 hours. This means that the times listed are affected by UK clock changes in the year, and will be adjusted by +/- 1 hour accordingly.
Trading CFDs on FTSE 100 index futures
Trading FTSE 100 futures means you agree to trade the index at a specific price on a specific date. With our index futures, overnight funding fees are included in the spread, meaning that you can hold positions for a long time without this additional cost. When trading futures CFDs on indices, you won’t pay a commission.
Trading CFDs on FTSE 100 options
Options give the holder the right, but not the obligation, to exercise the contract on or before its expiry date. When you trade options via CFDs, you’ll be using the derivative to speculate on an option’s premium – which will fluctuate as the probability of the option being profitable at expiry changes.
For example, if you buy a CFD worth $10 per point of FTSE 100 movement, you’d earn $10 for every point that the index rises above your chosen strike price, minus the margin you paid to open your trade.
Please remember that whereas buying options is inherently limited risk – you’ll only risk as much as the margin you pay when opening your trade – there is substantial risk when selling options. Selling a call, for instance, incurs potentially unlimited risk as market prices can just keep rising. Options trading is often only recommended for experienced traders.
CFD trading on FTSE 100 ETFs
Open a position on a FTSE 100 ETF with a CFD and speculate on the collective performance of the UK’s top 100 companies. The most common form of FTSE 100 ETF is a weighted tracker, which mirrors the make up of the FTSE 100 directly.
Examples of weighted trackers include the Vanguard FTSE 100 UCTIS ETF and the iShares Core FTSE 100 UCITS ETF.
Our charges include a commission of between 0.1% and 0.35% on each side of the trade (with a minimum fee of £10) and an overnight funding fee if you hold your position open after 10pm UK time.2
CFD trading on FTSE 100 shares
With us, you can trade CFDs on all the FTSE 100 shares. Trading CFDs enables you to take a speculative position, trade with leverage, or go short. Our charges include a 0.1% commission on each side of the trade (with a minimum fee of £10) and an overnight funding fee if you hold your position open after 10pm UK time.2
What moves the FTSE 100’s price?
Understanding what influences the FTSE 100’s price is important not only for opening your position, but also for knowing when to exit it. Amongst many other factors, the index’s price is moved by:
- Economic events: to cite but one example, the economic effects of the Covid-19 pandemic saw the index experience significant volatility throughout 2020, including a drop from the 7600 level to below 4900 in just over two months (-35.5%)
- Exchange rates: fluctuating exchange rates can affect the FTSE 100’s price because its constituents earn a lot of their income in other countries
- News releases: certain news releases are generally followed by a period of volatility in the market. If the news pertains to any of the industries or constituents of the FTSE 100, its price may be affected
- Earnings reports: changes to FTSE constituents’ valuations can have a substantial impact on the index price, depending on the weight of the stock
- Commodity prices: because around 15% of companies on the FTSE 100 are commodity stocks, commodity price fluctuations can influence the index’s price quite heavily
Traders should always use a combination of fundamental analysis and technical analysis before trading the FTSE 100, and follow their trading plan and risk management strategy.
Refine your FTSE 100 trading strategies
Refining your trading strategies is an ongoing project. Below are just a few tips to consider as you continue to develop your knowledge and master your craft.
- Decide on your trading style: there are four main trading styles – scalping, day trading, swing trading and position trading. Each trading style describes how often you place a trade, and how long you keep those trades running
- Study charts and price action: daily and weekly charts can help you gauge market sentiment, while price action can help you get a feel of what the market might do next
- Use technical analysis and indicators: it can be helpful to use technical analysis and trading indicators as part of your trading strategy to identify certain signals and trends within the market
- Look for FTSE trading signals: by looking at the FTSE 100 chart, you should be able to tell if it is in a trend. You can confirm trading signals with momentum indicators such as the stochastic oscillator or relative strength index (RSI)
- Set trading alerts: trading alerts enable you to set specific criteria for the FTSE 100 price and be notified immediately once the criteria have been met
- Follow the news: every time news about a company, such as earnings, is released, it can affect share prices. Keep a close eye on the economic calendar to help you trade according to the latest events
What else you need to know about the FTSE 100
How is the FTSE 100 calculated?
The FTSE 100 is calculated by weighing all stocks listed on the London Stock Exchange (LSE) by market capitalisation. The 100 companies with the highest market cap make it onto the index. Companies with a higher market capitalisation will represent a higher weight in the index and stocks with higher weightings have a bigger effect on the FTSE 100’s price.
What are the FTSE 100’s trading hours?
The FTSE 100’s trading hours are 4pm to 12.30am Monday to Thursday and 4pm Friday to 12.30am Saturday (UTC+8).* With us, however, you can trade our exclusive weekend trading hours – from 12pm on Saturday to 6.40am on Monday (UTC+8).*
Moreover, our CFD FTSE 100 futures trade 24 hours (7am Monday to 6am Saturday, UTC+8).*
*Our trading hours are based on UK GMT hours, and are converted to UTC+8 hours. This means that the times listed are affected by UK clock changes in the year, and will be adjusted by +/- 1 hour accordingly.
FAQs
What is the FTSE 100?
The FTSE 100 is an index of the UK’s largest 100 public companies by market capitalisation. It has become a popular way to gain exposure to the UK stock market and track the performance of the country’s economic health.
The market capitalisation of the index has grown significantly since its inception in 1984, as its constituents have experienced success and growth.
What are the ways you can trade the FTSE 100?
With us, there are a number of ways to gain exposure to the FTSE 100. You can:
- Trade the FTSE 100 index directly
- Trade FTSE 100 ETFs
- Trade FTSE 100 shares
When trading the FTSE 100, you’ll do so using CFDs. Here, you’ll speculate exclusively on the underlying asset’s price movements – in this case, either fluctuations in the index level of the FTSE 100, or movements in the prices of FTSE 100 ETFs or shares.
What should you know before trading the FTSE 100?
Before trading the FTSE 100, make sure you do your research and understand how the index works. Then, decide how you want to trade the index.
How do companies get onto the FTSE 100?
To get onto the FTSE 100, a company must be listed on the London Stock Exchange (LSE) and it must be one of the top 100 companies by market capitalisation on the exchange. If its market capitalisation drops drastically, a company might lose its listing on the FTSE 100.
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1 Average speed calculated from 1 to 28 February 2022.
2 Overnight funding is the charge you pay for keeping cash CFD trades open past 10pm UK time (times for international markets may vary); we‘ll make an interest adjustment to your account to reflect the cost of funding your position. Learn more about how overnight funding is calculated.
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