How to Trade the FTSE 100 with CFDs

The FTSE 100 is the most natural CFD instrument for UK traders — you understand the companies in it, you can track relevant UK news, and it trades in your time zone during normal working hours. Here's how to approach it strategically.

Understanding the FTSE 100's Character

Before strategies, understand what you're trading. The FTSE 100 is heavily influenced by global factors, not just UK news — because ~70% of constituent revenues come from outside the UK. This means:

• Wall Street direction (S&P 500) has massive influence on the FTSE open
• GBP/USD moves inversely — a falling pound often pushes the FTSE higher
• Commodity prices matter — mining and energy make up ~20% of the index
• It's a relatively mean-reverting index — extended trends are less common than on US indices

Strategy 1: The Opening Gap

The FTSE 100 often "gaps" at the 8am open relative to the previous close, due to overnight US markets and Asian session moves. These gaps frequently fill within the first hour or two of trading.

• Note the previous day's close (4:30pm) and the 8am open price
• If a gap up: look for a short opportunity back to the previous close
• If a gap down: look for a long opportunity back to the previous close
• Confirmation: wait for the first 15-minute candle to close before entering
• Stop: beyond the opening gap extreme + 10 points buffer
• Skip gap fills when there's high-impact UK or US data due before noon

Strategy 2: Daily Trend Following

On the daily chart, the FTSE 100 responds well to simple moving average systems:

• Use 20-day and 50-day simple moving averages
• In uptrend (price above both, 20 above 50): buy pullbacks to the 20 DMA
• In downtrend: short rallies to the 20 DMA
• Target: next major round number (e.g. 8,000, 8,500, 9,000)
• Stop: below the 50 DMA on a daily close

Strategy 3: Event-Driven Trades

The FTSE responds sharply to scheduled data events. The highest-impact events to trade around:

Key Levels for 2025

• 8,000 — major psychological support
• 8,500 — mid-range resistance / breakout level
• 9,000 — significant resistance (all-time high territory)
• 7,500 — strong historical support, pre-pandemic range
• Always mark the yearly open — price frequently reverts to it

Seasonal Patterns Worth Knowing

• "Sell in May" — weak historical performance May–September. Not a hard rule, but worth knowing.
• Santa rally — December tends to be positive for equities historically
• January effect — often a strong month for UK equities as institutional money is redeployed
• August and Christmas week — low volume, erratic moves, avoid new positions