An Introduction to IG Futures FTSE Trading
Trading in IG Futures FTSE is an exciting way to invest in the future of European markets. The FTSE 100, comprising the UK’s top companies, is one of the most widely used indicators of market performance worldwide. By trading in IG Futures FTSE, traders can earn profits from changes in the value of the FTSE 100 index. This article provides an overview of IG Futures FTSE trading, including the benefits, risks, and strategies involved.
Benefits of IG Futures Trading
1. Greater leverage – IG Futures contract allows traders to control a significant amount of underlying asset with a relatively small deposit (margin). This can magnify profits, but it also increases the risk of loss.
2. Easy access – IG Futures can be traded online, providing traders with a convenient way to invest in the FTSE 100. Trading can be done via desktop or mobile applications with ease. Likewise, IG Futures is regulated by the Financial Conduct Authority (FCA), providing traders with access to a trusted and reliable trading platform.
3. Competitive fees – IG Futures trading fees are competitive, with low commissions and spreads, providing traders with a cost-effective way to invest in the FTSE 100.
4. Flexibility – Traders have the flexibility to go long (buy) or short (sell) in IG Futures FTSE, allowing them to profit from both upward and downward market movements.
5. Hedging – IG Futures FTSE can be used as a hedging instrument to protect traders against potential losses in their investment portfolio. For instance, a trader who holds a long position in UK-based companies could potentially use FTSE futures to hedge against any negative impact on the value of those shares.
Risks Involved in IG Futures Trading
1. Leverage – As mentioned earlier, IG Futures trading involves higher leverage, which can magnify profits and losses. This risk can be mitigated by understanding the amount of risk associated with each trade.
2. Volatile markets – The FTSE 100 is very unpredictable, reflecting constant changes to the value of the UK’s top companies. This makes it difficult to predict the performance of the index, hence increasing the risk of trading in IG Futures FTSE.
3. Technical knowledge – Traders must have the technical knowledge and understanding of the market to make informed trading decisions. However, IG Futures FTSE provides educational materials for its users who are new to trading.
4. Liquidity – IG Futures FTSE market is much smaller, so traders need to be aware of its relatively lower liquidity. In cases where there’s limited activity, it may cause traders to suffer a loss or be unable to execute larger trades.
5. Margin calls – As IG Futures trading involves leverage, traders must ensure they maintain enough margin in their account(s). If the margin falls too low, the trading account may face a margin call or be forced to close out the position at a loss.
Strategies Involved in IG Futures Trading
1. Technical analysis – Technical analysis is the most commonly used strategy by traders in IG Futures FTSE. By examining the chart patterns, price movements, and other technical indicators, traders can make informed trading decisions.
2. Fundamental analysis – Fundamental analysis is used to analyze the underlying assets of the FTSE 100 companies – their earnings, dividends, and financial statements. Based on this analysis, traders can make predictions of the future movements of the index.
3. Trend trading – Trend trading is based on the principle that the current trend (either upward or downward) will continue. Traders use technical analysis to identify trends and ride the wave until it’s reached its tipping point.
4. Hedging – As mentioned earlier, hedging is a common strategy used by traders to minimize their risk in IG Futures FTSE. It involves taking positions in the futures market that are counter to those held in the cash market.
5. News-based trading – Economic and financial news impacts the FTSE 100 index, making news-based trading a popular strategy among traders. By analyzing the news and related market events, traders can gain insight on market movements and take informed trading decisions.
IG Futures FTSE trading offers traders the opportunity to participate in the performance of the UK’s top companies. By understanding the benefits, risks, and strategies involved in IG Futures FTSE trading, traders can make informed decisions about investing in this exciting market. Ultimately, traders must adopt a disciplined approach to trading, with clear trading plans and risk management strategies to maximize returns while mitigating losses.