The FTSE 100 is a number that tells us how the top companies in the UK are doing. These are the biggest 100 companies on the London Stock Exchange. When the FTSE 100 goes up it means the big companies are doing well. When it goes down it means they are not doing well. People who work in money and people who save money both watch this number. It helps them see if the UK economy is strong or weak.

This article will help you understand what the FTSE 100 is. You will learn how it is made how the companies are picked and how you can trade it. You will also see how the number tells us what is happening in the UK economy. When the FTSE 100 moves it can tell us big things about money in the UK and sometimes in the whole world too.

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What is the FTSE 100

The FTSE 100 means the Financial Times Stock Exchange 100. It is sometimes called the Footsie. It started in the year 1984. It shows the biggest 100 companies in the UK. These companies are listed on the London Stock Exchange. The FTSE 100 has many big names like banks oil gas and health companies.

How It All Started

The FTSE was made to show a better picture of the stock market in the UK. Before this there was another number called FT 30 but it was not very good. In the 1980s the UK made big changes in money rules. This was called the Big Bang. Because of this the FTSE became more important. It helped people understand what was happening in the market.

Why Is It Important for the UK

The FTSE helps people see if money is going well in the UK. But many companies in the list do not only work in the UK. They also do business in other places like the USA Europe or Asia. So this number sometimes changes because of things happening outside the UK. Still many people use this number to check if the UK economy is strong or weak. Big investors and small investors both look at it.

How Is the FTSE 100 Made

Market Size

To know who goes into the FTSE we look at market size. This means the price of one share times how many shares a company has. But we do not count the shares that people cannot sell. Only the free shares that anyone can buy or sell are used.

Free Shares Only

Some shares are kept by people who cannot sell them. The FTSE only counts shares that are free to sell. This makes the number more real and helpful.

Special Number Called Divisor

There is a hidden number called a divisor. It helps make the FTSE 100 easier to follow. When a company splits or joins or changes its shares this divisor changes too. But this keeps the FTSE 100 steady. It does not jump up or down too fast when something small happens.

Who Are the Companies in FTSE 100

The FTSE list has companies that are very strong and very big. These are called blue chip companies. They are safe for people who want to invest. They are leaders in their jobs like banks oil shops and health. Some big names are Shell HSBC BP and AstraZeneca.

How Often It Changes

The FTSE changes four times a year. It changes in March June September and December. Some companies go out and some come in. This is done to keep the list fair and real.

What Kind of Jobs They Do

The FTSE 100 covers many jobs. It has health oil mining banking and more. These jobs are very important in the UK. Most of the money in the FTSE comes from these places. That is why these companies are very strong.

How Can You Trade the FTSE 100

You can trade the FTSE in many ways. Some people buy all the shares using something called an ETF. Some people guess the price using CFDs or futures or options.

ETF

ETF means Exchange Traded Fund. It lets you buy a little bit of every company in the FTSE 100. It is easy and not too costly. You get profit if the price goes up. You also get some money when companies give out rewards.

CFD

CFD means Contract for Difference. You do not buy the real thing. You just guess if the price will go up or down. If you guess right you earn. If you guess wrong you lose. You can go long if you think price will rise. You can go short if you think it will fall.

Futures and Options

Futures means you agree to buy or sell at a later date for a price you say now. Options mean you can choose to buy or sell later if you want to. These are a bit hard to use and are best for people who know trading very well.

Conclusion

The FTSE is a big number. It shows how the top 100 companies in the UK are doing. If you want to trade or invest it is good to watch this number. You can learn a lot from it. You can see if the UK is doing well or not. You can also see what is happening in the world because many UK companies work in other countries too. By learning about FTSE 100 you become smart in money and smart in trading.

FAQs

What is the FTSE 100

It is a list of the 100 biggest companies on the London Stock Exchange. It helps people know how the stock market is doing.

How can people in the USA buy FTSE 100

They can buy something called ETFs. These follow the FTSE 100. Some names are iShares Core FTSE 100 Vanguard FTSE 100 and HSBC FTSE .

How do people make money from FTSE 100

They can buy shares. If the price goes up they sell and earn. Some shares also give small rewards called dividends.

Which is better FTSE 100 or S&P 500

FTSE gives more rewards. S&P 500 grows faster. It depends on what you want more. Both are good in different ways.