How to trade or invest in the FTSE 250
The FTSE 250 is home to some of the UK’s most well-known mid-cap companies, such as Aston Martin and Greggs. Find out how you can gain exposure to these top companies via cash indices, index futures, ETFs and stocks.
How do you trade the FTSE 250?
How you trade in the FTSE 250 will depend on your personal preference, your risk appetite and when you want to trade. You can trade the FTSE 250 with CFDs.
|Trading the FTSE 250||Investing in the FTSE 250|
|Ways to trade||CFDs||Buying ETFs or shares outright|
|Deposit required||20% of trade size (margin)||100% of trade size|
|Timeframe||Shorter term||Longer term|
|Liquidity||Higher liquidity offered by trading than investing in ETFs|
Trading the FTSE 250
You can get direct exposure to the FTSE 250’s price movements via CFD trading. Both are derivatives, which means you can trade rising or falling prices without taking ownership of underlying assets.
Derivatives also offer the benefit of trading on margin, which means you only need a small percentage of the trade value to open your position. However, you’d still get exposure to the full value of the trade. While this can magnify potential profits, it can also magnify any losses.
To start trading or investing in the FTSE 250, open a live trading account with IG.
How to trade the FTSE 250
You can trade the FTSE 250 by speculating on cash indices and index futures with CFDs.
If you want to deal at the current price of the underlying market, you may want to trade the FTSE 250 cash index. This option is especially popular among those who prefer shorter term trades, as cash indices offer narrower spreads. However, these positions are subject to overnight funding charges if they are not closed by the end of the trading day.
If you want to trade the FTSE 250 at a specific price on a specific date, index futures may be right for you. This method is preferred by traders with a longer term view, as positions can be held without paying overnight funding charges. Index futures have slightly larger spreads, but this is because the overnight funding charge is already included.
Ready to start trading or investing in the FTSE 250? Open your live account today.
What moves the FTSE 250’s price?
- Economic news and events: news about industries within the FTSE 250, as well as planned or unexpected events that have an impact on the economy, could affect the price of the FTSE 250
- Company earnings: when FTSE 250 constituents release their earnings, company valuations might change. Any adjustment to a company’s value could impact the FTSE 250’s price – even more so if the constituent has a substantial weight in the index
- Financial industry performance: more than 42% of the FTSE 250 is made up of financial services stocks. Therefore, fluctuations in this sector can influence the index’s price. Other industries that make up large portions of the index include industrials and consumer services
Note that these are only some of the factors that may affect the price movements of the FTSE 250. When trading the index, always use a combination of fundamental and technical analysis, follow your trading plan and stick to your risk management strategy.
FTSE 250 overview
The FTSE 250 is an index of the UK’s 101st to 350th largest public companies by market capitalisation. In other words, it represents the 250 biggest companies listed on the London Stock Exchange (LSE) after the FTSE 100.
Companies with a higher market capitalisation will have a higher weighting in the index, and so their successes or failures will have a bigger effect on the index’s price. The total market capitalisation of the companies on the FTSE 250 is around £456 billion.
FTSE 250 trading strategies and tips
Besides having a good trading plan and risk management strategy in place, the following tips can help you make the most of your FTSE 250 trading experience:
- Examine FTSE 250 charts: price charts can help you to judge market sentiment and consider whether the index might move up or down
- Use technical indicators: important trading signals and trends can only be identified if you use technical analysis. The FTSE 250’s chart patterns can help you to recognise trends, which you can confirm with indicators
- Set trading alerts: you can set criteria for the FTSE 250’s price, get instant notifications if the criteria are met and then trade accordingly
- Follow economic events: as you now know, news releases and economic events can affect the FTSE 250’s price. Keep an eye on IG’s economic calendar to stay update
Set up your IG account today to start trading the FTSE 250 and other indices.
1 Where indicated, indices are available for dealing 24 hours a day, between 23.02 Sunday and 22.15 Friday (London time) each week. This will be between 07.02 Monday and 06.15 Saturday (Singapore time) on non-Daylight Savings periods and between 06.02 Monday and 05.15 Saturday (Singapore time) during Daylight Saving periods. Other indices are offered only when the underlying market is open. Please ask dealers for information about public holidays.
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