What is the FTSE100 Index? | Definition and History


The FTSE100 is an equity index that measures the performances of the top 100 businesses listed on the London Stock Exchange based on market cap.

It was formerly among the most widely traded indices, since it was thought to be the finest indication of U.K. equity market strength. The FTSE 250 indexes, though, have grown a better realistic picture of the U.K. economy as the FTSE 100 has grown to embrace more global corporations.

FTSE 100 in a nutshell

  • The FTSE100 is a benchmark index for the top 100 companies on the London Stock Exchange.
  • Initially, it was seen as a strong indicator of the UK’s stock market performance.
  • Over time, it has expanded to include more global corporations, reflecting changes in the economy.
  • The index is predominantly composed of UK-based enterprises but also includes some international firms.

Understanding the FTSE100

The FTSE 100 is frequently regarded as a key sign of growth for U.K. firms and the U.K. overall economy. As a result, it often attracts investors seeking access to large U.K. corporations. While some listings include firms headquartered outside the UK, the FTSE100 is predominantly composed of UK enterprises and is influenced by daily events in the UK.

The term FTSE 100, or ‘Footsie,’ is a mix of the Financial Times and the LSE. Even though the letters’ FTSE’ are frequently referenced interchangeably with the FTSE 100 indexes, the FTSE Group includes numerous additional indexes, such as the above-mentioned FTSE 250.

Some of the most popular companies in the FTSE 100 include:

  • BP plc
  • HSBC Holdings plc
  • Unilever plc
  • GlaxoSmithKline plc
  • Royal Dutch Shell plc
  • AstraZeneca plc
  • Diageo plc
  • British American Tobacco plc
  • Lloyds Banking Group plc
  • Rio Tinto Group

The FTSE100’s European rivals comprise the CAC 40 in France and the DAX 30 in Germany.

History of FTSE100

The official logo of the Financial Times

The Financial Times Stock Exchange (FTSE) is an abbreviation for the two firms that founded the FTSE 100, the Financial Times, and the LSE. The FTSE All-Share, which was introduced in 1962 as the F.T. Actuaries All-Share, is the first U.K. stock market index still being used nowadays. The Financial Times was entirely responsible for the indexes until Jan 1984, when the FTSE 100 was introduced.

The FTSE 100 swiftly gained popularity as a leading indicator of U.K. stock performances, prompting the creation of further indexes in October 1992. The FTSE 250 has been the most noteworthy of these.

A few years after the FTSE 250 debuted, the F.T. – now a division of Pearson publications – and the LSE founded the FTSE Group to administer all the FTSE indexes. Following Pearson’s 2011 sale of its interest, the firm is now fully managed and controlled by the LSE.

Both indexes grew dramatically over the following few years, with the FTSE 100 surpassing the 5000-point threshold in August 1997 as well as the 250 following it in Feb 1998. The FTSE 100 reached a high of 6930.2 on Dec 20, 1999, a milestone that could last for the following fifteen years.

The peaks for both indexes were primarily fueled by massive increases in telecommunication, entertainment, and tech firms. However, on the opening day of trade in 2000, the dot-com bubble burst, dropping them down to under 4000 by April 2003.

While several of the index’s key trends closely resemble those of the S&P 500 in the United States, the second has a historical record of beating the FTSE 100. This is due to the FTSE 100’s focus on commodities and mining firms, which have had poor performances in the past few years, as well as its significant exposure to developing economies, which have also experienced slow development. Meanwhile, tech behemoths like Google and Facebook have contributed to boosting the S&P’s pace of growth.

How to trade the FTSE100 with Binary Options?

Trading the FTSE100 with Binary Options can offer rewarding opportunities if approached with a clear strategy. Below is a comprehensive guide to help you to kick-start:

1. Choose a Reliable Broker

Selecting a trustworthy broker is paramount. Opt for a well-established firm that not only offers Binary Options trading but also provides access to indices like the FTSE100.

Below are three top-rated Binary Options Brokers that meet stringent criteria for safety, competitive returns, and global presence. Each broker facilitates the opening of a free binary demo account, allowing you to practice trading risk-free.

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Broker:
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Yield: 97%+
Advantages:
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The offer:

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(Risk warning: Trading is risky)

Broker:
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Yield: 95%+
Advantages:
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(Risk warning: Trading is risky)

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The offer:

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(Risk warning: Trading is risky)

2. Register Your Account

After selecting a broker, proceed to register for a trading account. This typically involves supplying basic personal details, creating a secure login, and completing identity verification procedures as required by regulations. Some brokers may offer the convenience of signing up through social media profiles.

3. Demo or Deposit

Consider starting with a demo account to hone your skills in FTSE100 Binary Options trading without risking real capital. Familiarize yourself with the platform’s functionalities, experiment with different strategies, and build confidence. Once ready, deposit funds into your trading account using secure payment methods supported by the broker.

4. Select FTSE100 as asset

Binary Options allow traders to speculate on the price movements of various assets, including indices like the FTSE100. Choose the FTSE100 as your preferred asset, aligning with your trading strategy and risk tolerance. On binary options trading platforms such as PocketOption, you can find the FTSE 100 Index listed under the name 100GBP.

5. Develop your strategy

Craft a trading strategy based on thorough analysis of the FTSE100 index. Determine whether you anticipate the index to rise (Call option) or fall (Put option) within a specified timeframe. Employ diverse technical indicators such as moving averages, relative strength index (RSI), stochastic oscillators, and Bollinger Bands to identify potential entry and exit points.

6. Set expiry time

Binary Options contracts come with predefined expiry times, spanning from short-term to long-term durations. Consider your trading approach and select a suitable expiry timeframe. Decide whether to engage in short-term or long-term options trading.

7. Determine investment

Set the investment amount you’re comfortable with, keeping in mind any account restrictions imposed by the broker. Your investment directly correlates with potential returns and losses, so manage risk prudently.

8. Execute and Monitor

Once all parameters are set, initiate the trade by selecting either “Call” (Higher) or “Put” (Lower) based on your analysis. Monitor the trade until expiry and explore early closure options if provided by the broker.

If your prediction is correct, enjoy a payout of 51% (when using PocketOption) of your investment, depending on the broker and FTSE100 movement.

About the author

Percival Knight
Percival Knight is an experienced Binary Options trader for more than ten years. Mainly, he trades 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

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