How to short the FTSE in the UK
How to short the FTSE in the UK FTSE 100, or ‘Footsie’ as it is often affectionately known, measures the top 100 companies listed on the London Stock Exchange (LSE). It’s considered a proxy for the UK economy and its equities are frequently used by traders for trading opportunities.
When you short the FTSE, you’re betting that its prices are set to fall. This can be a profitable strategy in times of market corrections and recessions. It can also be an effective hedge for existing portfolios dominated by UK equities.
Traders can short the FTSE using CFDs, spread betting and inverse ETFs. All of these trading instruments have their own advantages and disadvantages, but they’re all regulated by the Financial Conduct Authority (FCA), meaning you can trade with confidence.
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With CFDs, you can speculate on the FTSE’s price movements with a small deposit. This is because you’re staking a percentage of the index’s total value, not the entire index. This means your losses can potentially outweigh your initial investment, but with careful position sizing and stop loss orders, you can limit these risks.
With a spread bet, you’re buying or selling a fixed number of points on the FTSE’s future price movements. This means that you’ll make a profit as the index moves in your favour and lose if it falls. For example, if you bet on the FTSE rising by 20 points, and it does, you’ll earn PS5 per point, plus your stake.