Trading the FTSE 100
The FTSE 100 is an index that represents the overall performance one-hundred different companies that are traded inside the London Stock Exchange. In order to profit from trading with the FTSE in binary options format, traders must understand the primary reasons that drive market movements. Below is a fundamental framework that can be used to trade this index within any platform.
The FTSE 100 in similar to all indices in that favorable market data typically leads to an increase in stock purchases, which in turn leads to an increase in the value of an index. Alternately, weak market data can lead to selling and a decrease in the value of the index. The key to successfully trading any of the indices to to know exactly which data reports to be monitoring and when this information is set to be released.
With the FTSE 100 data coming from any of the major U.K. banks should be of particular interest. Changes in interest rates can have quite the impact on the overall value of this index. As of now, primary interest rates are quite low, but increases are on the horizon as economic conditions continue to improve with time. Traders would be wise to closely monitor all forthcoming interest rate decisions.
Data coming from U.S. markets can impact the FTSE 100, but it is actually the European Union that is the top trading partner to the United Kingdom. When the Eurozone is experiencing either favorable or unfavorable conditions, it’s relatively safe to assume that the FTSE is going to be experiencing much of the same. Pay close attention to inflation data, manufacturing data, GDP, and housing data. All of these reports can create optimal binary options profit opportunities.
The most effective strategy when trading with all indices is to be prepared to enter into trade just after important data is released. There is typically a lull in the market just after the data is released, but once it has been processed by investors, changes can occur quickly. Extremely positive or negative sentiment can cause price trends, which happen to be the easiest type of price action to profit from.
The FTSE 100 is typically less volatile than the United States or Asia markets. However, this can actually make movement forecasts a bit more difficult to produce. The good news is that most platforms now provide instruments that can be paired with specific market conditions. When the FTSE is range-bound, Boundary or Range trades can sometimes be used to cash in on the reduced level of price action.
When monitoring Eurozone conditions and keeping track of economic releases, trading with the FTSE 100 index should not be difficult. Every asset is going to have specific data that can point directly to profit opportunities and this index is certainly no exception. On a final note, do take the time to see how the British Pound is performing prior to trading. Currencies do have an underlying link to indices and therefore should be considered with trading binary options with individual markets.
***Your capital may be at risk. This material is not investment advice.***