The FTSE 100 index, also known as the FTSE 100 (pronounced 'Footsie'), is a share index of the 100 most highly capitalised UK companies listed on the London Stock Exchange.
It is operated by the FTSE Group, which also operates the FTSE 250. The FTSE 100 represents more than four-fifths of the total market capitalisation of the London Stock Exchange (LSE).
Although a number of the largest companies in the UK have been FTSE 100 constituents for many years, the top 100 companies are reviewed every quarter. FTSE 250 constituents whose market capitalisation increases to the right level can become FTSE 100 companies.
There are a wide variety of factors that can affect the FTSE 100. Some of the most common types of factors include interest rate news, economic indicators and company announcements or events. Understanding these factors can help you to make the most of trading the FTSE 100.
UK interest rates can influence the health of the national economy and hence the performance of individual companies that make up the FTSE 100.
Economic indicators can include official unemployment figures, which can help signify the strength of the economy, Gross Domestic Product (GDP) figures and consumer confidence indicators. Each of these indicators can lead to optimism or pessimism in trading decisions which, in turn, leads to a rising or falling index.
Individual company announcements can include new product launches, executive board changes, the roll out of a new strategy, accidents or trading updates. Each of these can affect a company's share price or the entire FTSE 100. Bank losses in recent years, for example, helped depress share prices across a range of companies and sectors far beyond the banking sector.
Spread betting on the FTSE 100 involves speculating on its future price movement. Consequently, when trading the FTSE 100 through spread betting, you are not speculating on an individual company's performance.
One strategy is to concentrate on the big picture: how the index moves over time as affected by sufficiently large events or announcements that you can track through newswires, financial news sources or third party analysts and commentators.
It should be noted that you can normally only speculate on the FTSE 100, and its individual constituents, when the London Stock Exchange is open for business. It is closed over the weekend, and is open weekdays between 08:00 and 16:30. The LSE is closed on most public holidays.
Having said that, with products like financial spread betting you can trade many markets, including the FTSE 100 index, 24 hours a day, five days a week.
Financial spread betting does carry a high level of risk to your capital and losses can exceed your stake. It might not be appropriate for all investors. Make sure that you only spread bet with capital you can afford to lose. Always familiarise yourself with the risk and request independent financial advice where you feel it is necessary.