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Financial Dictionary - FTSE 100

FTSE 100

The FTSE 100, Financial Times Stock Exchange or Footsie, is a stock market index that includes the 100 largest listed companies in the London Stock Exchange (LSE).

This financial performance was created in 1984 with 1000 basis points. Today, this indicator includes companies such as HSBC, Astra Zeneca, BP, GlaxoSmithkline and Barclays, which represent 81% of the British securities market.

It's calculated by weighing the value of these 100 companies' shares and adjusting the free float via certain restrictions. When their stock prices rise, the value of their businesses rises without necessarily raising their capitalisation. In the same way, if the share price falls, the capitalisation of the whole will fall, although not all companies will suffer the fall.

Fluctuations in the price of this indicator are frequent and volatile; this indicator started with 1,000 points when it was created in 1984; it rose until 1999, when it hit its maximum level on the stock market, after which it began to decline until 2008 when it fell again. That is why we must exercise caution, attempt to uncover variables that may increase or decrease the capitalisation of their companies in order to predict, and, most importantly, have a complete grasp of how they work.

How the FTSE 100 works

First, the composition of the FTSE 100 varies over time: its list of companies changes as market rise and fall, or due to specific circumstances; upswings will typically occur during periods of economic expansion in the country, and vice versa, though this is not mathematical either because not all of its companies are British, but must be listed on the London Stock Exchange; i.e. they may well be based and earn their income in a foreign country.

However, because all of the indices in the rest of the world are linked, the rise or fall of other markets (most notably the US) will affect the other indices.

Its price is updated every fifteen seconds, and both its price and its history of records can be viewed in real time: its capitalisation, the average annual P/E, the dividend yield, the annual revaluation, etc.

Technical analysis

Technical analysis is the study of stock market charts to analyse the price and performance of the FTSE 100.

The prices and movements of an asset over time should be examined for patterns and trends that can help us predict upward and downward movements, while also considering market volatility, liquidity, and trend direction. Thus, analysts employ technical indicators and mathematics to generate signals that they can use statistically and probabilistically (they are not infallible).

These indicators include Bollinger Bands, MACD, moving averages, pivot points and others.

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