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Want to trade international indices like the FTSE 100? Here's how you can do it…

by , 10 June 2015

If you want to trade international markets, one way to take advantage of the overall market move is to trade indices.

For example, trading the FTSE 100 to gain exposure to the movements of the London Stock Exchange's largest companies.

So how can you do it? You can spread trade.

Read on to find out how this works…

Spread trading international indices

Let’s say you’ve been watching the FTSE 100 and you think the index is going to rise. You decide to put a long trade on.

When you logon to your spread trading account, the bid price of the FTSE 100 is 7,026.5 and the offer price is 7,027.5.

The bid price is the selling price. In other words, the price you’d enter the trade at if you put a short trade on.

The offer price is the buying price. As you want to put a long trade on, this is the price you enter the trade at.

The difference between the bid and offer price is the spread. This is where spread trading companies make their money.

With spread trading, you need to decide how much to risk per point. The more you risk, the higher your potential profits or losses.

How spread trading the FTSE 100 works

You decide to risk R10 a point. If the FTSE 100 rose to 7,037.5/7,038.5, you’d make R100. If it falls to 7,017.5/7,018.5, you’d lose R100.

If the trade goes the way you hope and the FTSE 100 rises 50 points from 7,027 to 7,077, your spread trading company is now quoting 7,076.5/7,077.5. You decide to take your profits for a gain of R490 ((7,076.5 – 7,027.5) x 10).

If the FTSE 100 fell 50 points, you’d lose R490.

You can trade many major international indices through spread trading companies.

So there you have it. How you can trade international indices like the FTSE 100.

Want to trade international indices like the FTSE 100? Here's how you can do it…
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