How to spread bet on the FTSE 100

How to trade the FTSE 100 with spread betting 

The FTSE 100 is one of the most widely followed equity indices in the UK. It tracks the 100 largest companies listed on the London Stock Exchange by market capitalisation. Constituents include multinational firms such as Shell, BP, HSBC and Unilever. 

Because many of these companies generate significant overseas revenues, the FTSE 100 is influenced by global growth trends, commodity prices and movements in sterling, as well as domestic UK economic data. 

Spread betting allows UK traders to speculate on movements in the FTSE 100 without owning the underlying shares. This guide explains how it works and how to approach it with structured risk management. 

What is spread betting? 

Spread betting is a leveraged derivative product that allows you to speculate on whether a market will rise or fall. 

• ‘Leveraged’ means that you can access a larger position for a relatively small initial outlay – the margin. Your profit and loss are based on the position’s full size, so can move quickly. 
• ‘Derivative’ means the spread bet price is derived from an underlying market – in this case, an index. You don’t own the underlying asset. You’re simply speculating on its price movement.
  

When spread betting on the FTSE 100: 

• You choose to buy if you believe the index will rise.

• You choose to sell if you believe it will fall.

• You select a stake per point.

• Your profit or loss is determined by how many points the index moves multiplied by your stake.
  

For example, if you stake £5 per point and the FTSE 100 moves 20 points in your favour, the potential profit would be £100. If it moves 20 points against you, the loss would be £100. 

Under current UK tax rules, spread betting profits are generally exempt from Capital Gains Tax and Stamp Duty for UK residents*, although tax treatment depends on individual circumstances.

How FTSE 100 spread bets work 

FTSE 100 spread bets are quoted in points. Each point movement equals your chosen £ stake. 

Key components to understand:

The spread:

In your platform’s deal ticket, you’ll be quoted a buy price and a sell price. The difference between the two is the spread and represents the main trading cost. 

Stake size:

Your stake per point determines your exposure. A larger stake increases both potential returns and potential losses. 

Margin requirement:

Because spread betting is leveraged, you are required to deposit an initial margin to open a position and maintain sufficient margin to keep it open. 

If the market moves against you and your account equity falls below the required maintenance margin level, you may receive a margin call asking you to deposit additional funds. If you do not meet this requirement, your provider may close your position automatically, potentially at a loss, to prevent your account from going further into deficit.

Before placing a trade, you should define: 

• Your entry level – where you’ll open your trade, based on your analysis of the market

• Your stop-loss – the level at which you’ll close your trade if the market moves against you, to limit potential losses

• Your target level – where you plan to take profit, aligned with your risk-reward ratio and overall trading strategy

This helps to ensure that your risk is determined before you execute your trade.

What moves the FTSE 100? 

Understanding market drivers helps shape your trading view, though it's important to note that even with thorough analysis, market outcomes remain uncertain. 

The FTSE 100 can be influenced by a range of factors, including: 

• UK economic data (inflation, GDP, employment)

• Bank of England interest rate decisions

• Global risk sentiment

• Commodity prices, particularly oil

• Movements in GBP

• Constituent company earnings
  

Because of its sector composition, the FTSE 100 often behaves differently from US indices such as the NASDAQ, which have heavier weightings in technology stocks.

To help decide their entry, stop and target levels, traders will often assess: 

• Volatility: how fast and far the FTSE tends to move in a 

• Range characteristics: the levels at which the index tends to trade, and whether it typically moves within well-defined boundaries or extends beyond established price ranges.
  

When is the FTSE 100 most active? 

Liquidity and volatility vary throughout the trading day. Activity often increases at certain times, though higher activity also means faster and potentially larger price movements, which can increase risk: 

• Around 8:00am UK time, when the London market opens

• Later in the afternoon, as US markets open and global participation rises

• During major UK or US economic announcements

Outside these periods, price movements may slow or reflect overseas developments. Aligning your timeframe with market conditions is an important part of trade planning, particularly in managing execution risk and understanding the environment in which your position will be active.

How to trade the FTSE 100 with Pepperstone 

If you're a UK trader, you can trade the FTSE 100 via a spread betting account with Pepperstone.

The general process involves:

1. Open a spread betting account

Complete the application process and identity verification.

2. Fund your account

Deposit sufficient funds to meet margin requirements.

3. Access the trading platform

Pepperstone provides platforms such as MetaTrader 4, MetaTrader 5 and cTrader.

4. Select the FTSE 100 market

Locate the UK 100 instrument – our FTSE 100 product – in the spread betting product list.

5. Set trade parameters

Define: 

• Direction (buy or sell)
• Stake per point
• Stop loss
• Take profit (optional)

Pepperstone’s order ticket displays margin impact and projected exposure before confirming the trade, helping you assess risk in advance.

6. Monitor and manage the trade

You can adjust or close your position as market conditions evolve. Be aware that overnight financing charges apply to positions held beyond the trading day and can affect your overall cost. 

Risk management considerations 

Spread betting involves leverage and carries a high level of risk. The value of your positions can move quickly against you, and you may lose more than your initial deposit. You should only trade with money you can afford to lose and ensure you fully understand how leverage works before trading.

Risk management principles include: 

• Choosing a stake size appropriate to your account balance — only trade with money you can afford to lose, and consider how a loss on any single position would affect your overall account

• Defining stop losses before entry — a stop loss can help limit potential losses if the market moves against you. Note that standard stop losses are not guaranteed and may be subject to slippage in fast-moving markets.

• Avoiding emotional position sizing — decisions made under pressure can lead to taking on more risk than your circumstances warrant

• Understanding macroeconomic drivers — being aware of how market developments can move the FTSE 100 helps you assess the risk of your position.
  

Spread betting provides a flexible way to trade the FTSE 100, but outcomes are never certain and your risk should always be defined before you open a position. 

Spread betting is leveraged and losses can exceed your deposits. Ensure you fully understand how leverage works before opening a position and consider carefully whether you can afford to take the high risk of losing your money. (It applies to both pro and retail clients)