As the FTSE is a weighted index which basically means the bigger the market cap of the company the more it moves the market weight. So my advise for someone interested in spread betting on indices would be to start with these top 4 movers and then when they start to get a feel for these companies and can speculate on their movements with a little better than average success, then they can look at the others by weight first.
This, in time will give you an indication of speculation on the FTSE Or failing that, do what most do and take a gamble on gut feeling or one piece of information. Be aware that most jump in and don't make it over a period of time, so, jumping head-on in index markets is not recommended.
It must always be remembered that you cannot actually 'buy' 'the FTSE'. You can buy a future or option for cash settlement on a future date but you can never actually buy the index. For instance none of the spread betting providers quote the market price on the cash index. You have to be trading the FTSE future to get a correct price, usually there is a little bit more spread if you are trading via spread betting. The real exchange FTSE future price is usually 0.
The important thing is, that the spread bet FTSE cash index reflect the movement of the underlying asset, not necessarily that the quoted price is the same as the index. Let's take the case of a spread betting provider; Capital Spreads , Capital Spreads do not quote the 'cash' price i. The rolling daily is quoted a set difference from the Future and this is calculated from the 'cost of carry' plus and dividends which are due to go 'ex-div' between NOW and the expiry of the Future.
This is commonly called the 'fair value'. Sometimes the fair value can move a little bit during a session but generally not more than a couple of points. This is because the cash index only updates once every 15 seconds count it If anyone quoted from the cash index they would be picked off all day long as traders watched the futures move and just bought or sold the cash in the knowledge that the price will move to take into account the LIFFE market.
This takes a little bit of time to do, but for those of us who have sharescope or similar it's fairly easy to do. If you do this, you will see that if both the banks and the miners are up it is almost impossible for the FTSE to be down.
It will take an afternoon to do but once done is easy to maintain forever. This simple task enables you to look behind the market and see what is really happening. The less well known Nasdaq Composite is also worth a look. Be aware that the USA being the world's largest economy there is a strong 'feeling' i.
If the markets have been depressed within the US, you can expect the same sentiment to be reflected in the FTSE over at least the first few hours of trading the following day from within the UK markets. If that spikes higher, I usually reduce my stakes to a quarter of the normal sizes, and I don't go against the prevailing intraday trend. This is why consolidating market strategies require traders to use indicators to identify entry and exit points within the range bound market, such as the relative strength index RSI.
Learn more about range trading. An important part of a consolidating market strategy is volume analysis. When a market is trading within a range, the volume of trades is usually low and flat, but if the range is about to break there will usually be a rise in volume.
This can be a clear indication that it is time for traders to think about closing their positions and, potentially, switching to a different strategy. Scalping is a trading style that is designed to profit from small and frequent price changes. Many believe taking such short-term positions might not produce the same results as longer-term strategies but spread betting can help capital to go much further.
This is because spread betting is a leveraged product, which means that traders can open positions that are much larger than their initial deposit. It is important to remember that while leverage can magnify your profits, it can also magnify your losses.
This makes it crucial to have a suitable risk management strategy in place. Breakout strategies are based on the idea that key price points are the start of a major movement, or expansions in volatility — so by entering the market at the correct level, a trader can ride the trend from start to finish. Typically, traders looking to take advantage of a breakout will need to identify support or resistance levels — as once these have been met or surpassed, they will need to enter the market.
One strategy used to spread bet breakouts is to place limit-entry orders at key price points, so that if the market moves through the support or resistance level, the order is executed automatically. Although the market has been trading in a range for two weeks, you believe it is due to breakout into a downward trend.
If the market did fall below this price, your spread bet would be executed, and you could ride the breakout until your analysis indicated the downtrend was over. Reversal trading strategies are based on identifying areas in which trends are going to change direction. Reversals can be both bullish or bearish, giving a signal that the market is either at the top of an uptrend, or at the bottom of a downtrend. Traders using this strategy would open a spread betting position in the opposite direction to the current market trend, ready to take advantage of the reversal.
When trading reversals, it is important to ensure that the market is not simply experiencing a retracement — a more temporary move. Retracement levels are commonly identified using the Fibonacci retracement tool. If the price goes beyond the levels identified by the tool, it is taken as a sign the market is reversing. Although reversals can be a complicated spread betting strategy, with the use of indicators, there can be a wealth of opportunities.
In order to execute a reversal strategy, a trader will need to utilise a confirmation tool. These can include:. Although FTSE has been in a downtrend for the last week, you believe that following positive earnings announcements for major FTSE constituents, the trend will reverse.
You decide to enter a position if you identify the double bottom candlestick pattern, in the hopes of taking advantage of the upcoming price increase. If the market did reverse, you would be in a position to profit from the upswing. However, if the market continued to decline, you would suffer a loss. There are a few key things every trader needs to know before they implement a spread betting strategy. It is important to:. Before you start to spread bet, it is crucial to have an understanding of what spread betting is and how it works.
When you spread bet, you can speculate on the future price movements of a range of global markets, such as forex, commodities, indices and shares. Prior to even thinking about which strategy you are going to implement, you should create a trading plan that will give your time on the markets clear direction and purpose.
Your plan should always be unique to you, but most plans include:. Most people will choose to trade a market that they already have an interest in, so they have prior knowledge that they can fall back on. With IG, you can trade over 16, markets, including indices, forex, shares, commodities, cryptocurrencies and many more. Discover a range of forex trading strategies. Before you open any spread betting position, it is important to be aware of exactly how much you could stand to lose if the market turned against you.
Especially as spread bets are leveraged, you could stand to lose — or win — much more than your initial deposit. It is always wise to think about your trade in terms of its full value, rather than the amount you pay to open it. Stop-losses will close a trade if the market moves against you, while limit-close orders will close your position once it has reached a certain amount of profit.
Learn more about the types of order. Footnote 1 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.
Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Discover the range of markets and learn how they work - with IG Academy's online course. Compare features.
Marketing partnerships: marketingpartnership ig. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
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