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FAQ Page 2 - Question 14

Q: Can money be made by buying or selling FTSE spread bets slightly before the 8am opening of the FTSE futures?

A: It was certainly possible a couple of years back and maybe still is. But you've got to be patient and wait for your spots.

I used to know a chap who specialises in this kind of trading. He used the FTSE 100 futures rather than spread bets though.

• The strategy was simple, he used to estimate where he thought the FTSE futures would open and then place a limit buy order 20 points below that level and a limit sell order 20 points above
• If the futures then opened out of whack he'd usually be filled on one of the orders, and would quickly look to lock in profits on 50% of his position, ie take a 10-20 point profit
• For example, the FTSE 100 futures are expected to open 30 points lower at 4220 when they open at 8am
• At 7.50am the guy puts in 2 orders, to buy at 4200 and to sell at 4240
• If the market opens below or above one of those levels then he'd trade
• He quickly looks to take profit on half of the position and then usually worked a breakeven stop loss on the other half (he traded in multiple of 2 futures contracts)

Ultimately what the strategy is trying to do is to catch the market off balance in the heat of the opening. If everyone is forecasting it to open down by 30 points and it opens 50 lower then they'd likely be a mad rush as traders try to snap up the unexpected cheap prices. Could it work by using Spread Bets? Most probably, but you'd have to be very quick and be instantly ready to take action.

One final point, how did he forecast where the market would open? This is actually not that hard after watching prices for a few months.

• The FTSE future closes at 5.30pm but the American stock indexes are basically traded 24 hours a day (when not open during the day they are traded on electronic exchanges)
• As the FTSE basically mimics the American market you take the difference from where say the S&P500 was at 5.30pm and where it is at 7.50am
• Then translate this into FTSE points
• It sounds complicated but it's not
• If all fails call your brokers and ask them for what is called the 'opening call' - as in 'what's your call for the FTSE this morning?'