Spread betting the FTSE 100

The index is designed for the creation of derivatives, index tracking funds, ETFs and performance benchmarks. Spread betting can be added to the list of financial products that find a key use for the index.

At the time of writing HSBC Holdings is the largest company on the FTSE 100, followed by BP and then Vodafone Group.

Thee 100 companies represent about 80% of the stock market's entire value. The higher a company's market capitalisation, the greater influence it has on where the FTSE moves.

Trading starts at 08:00 and continues until 16:30 when the closing auction begins, with closing values taken at 16:35.

By their nature, FTSE 100 companies are the largest in the UK. Consequently both domestic and international news activity can have a bearing on their price movements.

At the same time, large companies tend to experience less volatility than smaller ones. While this reduces your profit potential in trading, it also lowes the chances of a dramatic price swing catching you by surprise.

Spread betting the FTSE 100

There are many ways to trade the FTSE 100, and each method has its own pros and cons. Standard share trading is subject to stamp duty and capital gains tax, but will risk only your initial investment.

Financial spread betting on the other hand is completely tax-free and offers a range of tools - such as mobile trading and stop loss orders - to support your speculating.

The FTSE 100 is a very fluid index - courtesy of its shear size.
Liquidity means spread betting companies can offer a significant "pound per point" trading requirement.
This in turn allows them to offer cheap spreads on the index.
In fact, most companies charge a spread of 1 point on the FTSE 100, some even charge 0.8 points.

Another comparably cheap financial instrument on offer at most spread betting companies is the EUR USD rate.
The most heavily traded currency pair in the world is also very fluid, hence its popularity with spread bettors and forex traders.
Many spread bettors prefer to leave these popular instruments alone as their liquidity means large intra day movements which ensure large amounts of money can be lost and won