- What is the NASDAQ 100 Index?
- How to trade the Nasdaq 100 Index.
- Risks Involved.
The Nasdaq is a term that can refer to two different things: first, it is the National Association of Securities Dealers Automated Quotations exchange, the first electronic exchange that allowed investors to buy and sell stock on a computerized, speedy, and transparent system, without the need for a physical trading floor. The second refers to an index. When you hear people say that the “the Nasdaq is up today,” they are referring to the Nasdaq Composite Index. Let me tell you you can make a whole lot of money if you know how to trade it well. Trading the Nasdaq is a slight different from trading the currency market. The reason it is symbolized as NAS100 is that its the Index covering 100 largest and most liquid companies on NASDAQ stock exchange that includes a broad range of industries.
The index includes companies from various industries except for the financial industry, like commercial and investment banks.
How to trade the NASDAQ100.
When trading the Nasdaq, a range of underlying fundamental variables affect the price of the index. Traders must be aware of these variables and their possible impact on the index. These variables can range from macroeconomic variables to the fundamental composition of the index. Here are some of the main movers of the Nasdaq 100 index:
- The largest companies are in the Nasdaq 100. The Nasdaq is a market-capitalization-weighted index so the largest companies tend to move it the most, like Apple, Microsoft and Amazon. Some indices are weighted differently, and this can affect their price. It is important to understand the differences between the major indices.
- Changes in the Federal Reserve’s stance on monetary policy can have adverse effects on all stock markets, including the Nasdaq 100 index.
- Economic data like inventory levels, employment, CPI, interest rates and GDP. This data can signal what actions the central bank will take on monetary policy.
- Trade wars and currency wars can impact large companies in the Nasdaq by way of tariffs and trade barriers.
Tips And Risks
- First, you must know just like any other asset class you can easily lose your initial investment if you do not have the right knowledge and skill.
- Before entering a trade, decide on a risk-reward ratio. It is extremely important to have a positive risk-reward ratio. See our guide to Traits of Successful Traders for the statistics on taking trades with a positive risk-reward ratio.
- Entering a trade before major economic data releases should be avoided. Major economic data can cause massive spikes in volatility, it is better to wait for the markets to settle before trading again.
- Record all your trades so that you can preview the trades afterwards. By doing this you can pinpoint and work on your weak spots.
- Do not trade if you are emotional, tired or bored. Only trade when you have done your research and analysis and are confident in the trade.
- Select the correct trading time frame that suits your goal.
Now here is where we get a lot of questions from traders. Lucky enough the NASDAQ is offered by many brokers and to some brokers, it’s given a different Label (USTEC) now I can’t pinpoint directly where to go just conduct your own due diligence as there are hundreds of brokers offering the instrument but I will list down 10 brokers and choose the one you like. NOTE: These are not recommendations rather just brokers who offer to trade the NASDAQ. My recommendation is down below this list.
- Interactive Brokers
- FIBO Group
- TemplerFx (You need more capital)
TRADE THE NASDAQ 100 WITH THE SAME BROKER I USE. THEY HAVE BEEN TAKING CARE OF ME FOR THE PAST 10 MONTHS AND SO DO YOU. SUITABLE LEVERAGE YOU NEED, SUITABLE MARGIN FOR SMALL ACCOUNTS. GET STARTED WITH AVATRADE NOW
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FOREX TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FOREX CAN WORK FOR YOU AND AGAINST YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS RETURNS. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS