Wednesday, 17 February 2010

How to trade the FTSE 100

Learn How to trade the FTSE 100 UK...

The FTSE 100 is an Index made up of the 100 largest U.K companies by market capitalization listed on the London Stock Exchange.  Market capitalization measures the size of the company and is calculated by multiplying the number of shares in issue by the share price.  The FTSE was first calculated in 1984 with a base value of 1000 and now represents about 81% of the value of all stocks listed on the London Stock Exchange making it an accurate barometer of U.K business prosperity.

What makes it move?

Company Earnings. 

Traders monitor the earning of companies in the FTSE which are normally released on a quarterly basis. There will be a consensus among analysts as to what that number will be and if the actual number is better than the analysts  expected then the price should rise and if it is worse then the price should fall. The earnings for companies that make up a bigger percentage of the FTSE (i.e. the top 10 by market capitalisation) will have a bigger effect on the movement of the FTSE and should be watched closely.

NEWS

All day long traders are glued to their news screens watching for stories that may impact the economy and the markets.

The news that will move the FTSE can vary from company specific news to global news stories and traders are looking for any news that will cause investors to enter or exit the market.
It is essential to have access to live news as often financial markets will have already moved by the time most people read the story in the paper. Through Getdealings twitter market commentary we bring you the live news stories and rumours the professionals are discussing right now.

Interest Rates.


FTSE traders will keep their eyes open for any potential change in Interest rates as this will have an effect on stock market valuations. The general rule is that lower interest rates are good news for the FTSE as not only do the companies in the FTSE have lower debt payments( making them potentially more profitable) the returns the FTSE could offer look more attractive compared to the lower interest rate you will get from bonds

Article Source: http://www.articlesbase.com/ - How to trade the FTSE

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