FTSE 100 CFD Trading Guide

What is the FTSE 100?

The FTSE 100 (Financial Times Stock Exchange 100 Index) is the UK's most important stock market benchmark. It tracks the 100 largest companies listed on the London Stock Exchange by market capitalisation. You'll recognise many of the names: HSBC, Shell, BP, Unilever, AstraZeneca, Vodafone, Rio Tinto.

The index was created on 3 January 1984 with a base level of 1,000. Today it represents roughly 80% of the total market cap of the London Stock Exchange.

How to Trade the FTSE 100 via CFD

You can't buy the FTSE 100 directly — you trade a derivative that tracks it. The main options for UK traders:

• CFD (Contract for Difference) — profits are subject to Capital Gains Tax. Losses can offset other CGT gains.
• Spread betting — profits are tax-free for most UK retail traders. You bet £X per point the index moves.
• Futures — quarterly contracts, popular with professional traders for lower overnight costs

CFD and spread bet providers like IG and CMC Markets offer FTSE 100 with tight spreads, typically 1 point. Leverage for retail clients is capped at 20:1 by the FCA for major indices.

What Moves the FTSE 100?

• GBP/USD exchange rate — roughly 70% of FTSE 100 revenues come from outside the UK. When sterling falls, overseas earnings become worth more in pounds, pushing the index higher. This creates an inverse correlation with GBP/USD.
• Global risk sentiment — FTSE 100 is a risk asset. Risk-off events (recession fears, geopolitical crises) pull it lower; risk-on rallies push it higher.
• Commodity prices — Mining (Rio Tinto, Glencore, Anglo American) and oil & gas (Shell, BP) represent ~20% of the index. Rising commodity prices generally lift the FTSE.
• UK economic data — GDP, CPI, employment data affect investor confidence in UK plc
• Bank of England decisions — rate rises increase borrowing costs for companies but can also signal economic strength
• US market direction — Wall Street moves overnight heavily influence the FTSE open

Key FTSE 100 Constituents

Trading Hours

• Official market hours: 8:00am – 4:30pm London time (Monday–Friday)
• Pre-market and after-hours: Many CFD/spread bet providers offer 24-hour trading outside these hours at wider spreads
• Best liquidity: 8:00am–10:00am (London open) and 2:30pm–4:30pm (New York open)
• Avoid: Major UK bank holidays, Christmas week, and the first week of August (low volumes)