London Stock Exchange Explained

Within the isles of the United Kingdom there is one stock market that stands head and shoulders above the rest. The London Stock Exchange (LSE) is often referred to as a single entity, but in fact it is compiled from a variety of different arenas and components. There are over 2,000 companies currently on the LSE, from industry powerhouses to local upstarts; the span of the LSE is both vast and wide. This guide explains both the elements and importance of the London Stock Exchange.

Indices

Those looking to trade with the LSE need to understand that even though the exchange itself is homed in the UK, not all the companies featured are UK based. In fact, across the multitude of markets featured, a large percentage is, plan to, or do have an overseas presence. The markets that both UK and international companies hold a place with on the LSE will be within one of the following indices.

FTSE 100
FTSE 250
FTSE 350
FTSE SmallCap
FTSE All-Share
FTSE Fledgling Index

The above are considered the main markets, however it isn’t where there the LSE begins and ends. Part of the LSE is dubbed the Alternative Investment Market (AIM) or junior market. It is for smaller companies who want to float shares in a smaller realm that is away from the main market. The AIM is made up of the following:

• FTSE AIM UK 50
• FTSE AIM UK 100
• FTSE AIM UK All-Share

Funds

As the LSE has a wide range of markets, there are several different ways to go about investing. But, investments are not risk free and those who opt to the use the LSE must accept that. A leading way to invest via the LSE is with a fund, using a fund allows for increased diversity and spreads the risk element involved. Although these self-proclaimed “fund supermarkets” do take an element of control out of your hands.

Spread Betting

If a high-risk/high reward option is what you’re looking for, then spread betting might be right for you. Looking solely at stock performance, via a range of low, medium and high-risk companies can often lead to a profitable outcome. Spread betting can also minimize your fee and commission costs, but does require a moderate degree of knowledge with regards to the current market.

Standard Trading

The most popular way to trade the LSE is by acquiring and selling shares via traditional means. It is the leading way to have complete control of not only your portfolio, but also the profits and losses you make. As the element of control is higher (even with the input of a broker), it is advised that you have a pre-established knowledge of how the LSE works before parting with any money.

Final Thoughts

The LSE hasn’t been around since 1801 for any reason, it is a premier stock market, featuring industry-leading companies. If you are looking for a place to invest, trade and make money, then the LSE should be one of your first ports of call.

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