The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange, ranked by market capitalisation. It is the number many UK news bulletins still treat as “the market”. For a trader it is more specific than that: a basket, a cash session, and a sentiment gauge that is only loosely a story about the high street.
Watching it is not the same as needing to trade it. Many people who spend the morning in GBP/USD still glance at it because London risk appetite and sterling often share a room, even when they do not share a direction.
What the Index Actually Contains
Membership is not a prize for being British in operations. It is a ranking of listed size. Banks, energy, miners, pharmaceuticals and global consumer names have historically dominated the weight. A large slice of earnings can be overseas, billed in dollars or other currencies.
That is why a strong FTSE 100 day is not automatically a strong UK domestic story. A weaker pound can lift the sterling translation of foreign revenue for some constituents. A weaker China growth print can weigh on miners even if UK retail sales look fine.
The FTSE 250, the next 250 listed companies, is often described as more UK-facing. The comparison is a tendency, not a clean split.
The Cash Session UK Traders Actually See
The London cash equity market is commonly treated as 08:00 to 16:30 UK time. There is an auction around the open and the close. Futures on the index trade outside those hours, so the number on a CFD screen at 07:00 is not the cash print, even if it uses the same name.
UK data at 07:00 can move both sterling and the futures before the cash open. The 08:00 auction can then gap relative to the previous close. That gap is ordinary, not a glitch.
Why Forex Traders Still Watch It
Sterling and the FTSE 100 sometimes rise together when global risk appetite is firm. They sometimes part company when the story is rates, not equities. There is no reliable rule that “risk on” means both go up in lockstep.
Still, the index is a visible London thermometer. A sharp drop through the cash morning can coincide with a bid for the dollar and a heavier pound. A grind higher can coincide with quieter sterling. Coincidence is not causation. It is context.
The useful habit is to notice whether the index and the pound agree that morning, not to force a position because they disagree.
If you are not sure whether you are using the FTSE as context or as an unplanned second market, a free traders assessment can help you review how many instruments you actually follow in one session.
Cash, Futures and CFDs Are Not the Same Ticket
Owning the underlying shares is not the same as holding a futures contract, and neither is identical to a retail index CFD. Hours, financing and overnight costs differ. The headline number can look the same while the ticket is not.
Leverage on an index CFD can also make a “small” point move look large in pounds. The FTSE 100 can travel tens of points in a London morning without anyone calling it a crisis. Size turns that travel into account damage.
A Watchlist Item, Not a Personality Test
Some UK beginners feel they ought to follow it because they live here. Geography is not a method. The index is useful as a scheduled, sterling-denominated risk gauge with a known cash open. It is not homework you fail by leaving it on the watchlist.
For teaching that treats UK indices, sterling and session structure as one picture, Samuel and Co Trading offers structured courses aimed at people who want to know what they are watching before they add it to the plan.
If you want a clearer picture of how you currently use UK market context, take a free traders assessment and treat the result as a study prompt.
Conclusion
The FTSE 100 is a capitalisation-weighted basket of 100 London-listed companies, not a pure score for the UK high street. Traders watch it because it is the local equity session, a liquidity event at 08:00, and a rough read on whether London is in a risk-on or risk-off mood.
Watching is optional. Trading it is a separate decision. The educational point is to know what is in the basket, which hours are cash, and why a move in the index and a move in sterling can rhyme without being the same trade.
