The Nasdaq-100 is a group of stocks in the US with many shareholders. It consists of 100 of the most actively traded companies on the Nasdaq stock exchange. Also known as NSDQ100, US Tech 100 or US100, it is comprised of 100 corporations, all of which are included in industries that do not belong to the financial sector. These include biotechnology, retail, industrial and technical sectors, health care services and others.
The good news is that traders can take advantage of the eToro platform to invest on the NASDAQ CFD market. If you're interested to trade this index via their platform then continue reading to know more.
Thinking of trading NASDAQ-100 with eToro?
78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
History of Nasdaq
The NASDAQ is a New York City stock exchange formed by the National Association of Securities Dealers in 1971. It is the world's second-largest stock exchange in market capitalization, trailing only the New York Stock Exchange (NYSE). Unlike other exchanges, it does not offer the traditional trading floors.
While it was initially illicit for electronic trading, it did give automatic stock quotations during its early years. The feature contributed to the reduction in the bid-ask spread, making it unpopular among securities brokers. It became the primary exchange for huge over-the-counter (OTC) trades. The NASDAQ became the first exchange for offering online trading services in 1998.
Factors to Consider When Trading Nasdaq-100
So what variables should you consider when investing on the NASDAQ index?
- Share Price is the proportion of each firm in the Nasdaq100 affecting the overall index's share price. The index is a weighted average of share prices; increasing share prices boost the index while declining share prices decrease it. Consider that the Nasdaq100 weights company shares differently based on market valuation.
- Trader Sentiment affects the prices of the underlying stocks. Share prices might rise in response to an unexpected disclosure of quarterly profits or predicted growth. Significant purchasing or selling of a company's stock might be enough to alter the price since it attracts the attention of more traders.
- Political Events could either help or harm corporate activity in trading. The new regulations could affect a corporation's ability to conduct business, which influences the entire index if the company's components are focused on within this industry. The Nasdaq 100 and the companies included here are influence by a variety of factors. Revenue, entrepreneurship sentiment, economic stability, and other factors that affect the adjusted weight index are price to market capitalization. Traders must be knowledgeable about stock movements, and news from across the world can preserve the rank of the market.
How to Trade Nasdaq-100?
Successful Nasdaq trading requires the application of comparable analysis techniques to other financial marketplaces. Traders may use technical analysis to examine charts in search of buying or selling indications. Indicators can assist technical analysts in identifying current market trends, movements in sentiment, and possible retracement patterns.
Proper leverage, a favorable risk-reward ratio, and limiting the exposure of all active transactions to less than 5% of total equity are all essential components of risk management. Fundamental analysis may also be utilized to trade the Nasdaq stock market.
A variety of significant elements impact the index's price. Some of the most noteworthy changes in the NASDAQ 100 index include:
- Nasdaq consists of the largest corporations in the world due to its market capitalization-weighted index.
- Modifications in the Federal Reserve's stance on monetary policy can harm entire stock markets.
- Economic statistics such as consumer price index, interest rates, and gross domestic product can provide insight into the central bank's monetary policy operations.
- Through tariffs and trade restrictions, trade and currency conflicts can negatively impact big Nasdaq companies.
Trading Nasdaq-100 via ETFs
The objective of trading is to profit from upward movement in the price of the NASDAQ 100. While people cannot directly invest in the NASDAQ 100, they can invest in ETFs and stocks of firms that are included in the index.
Traders must immediately contribute the whole amount of their position when they choose to invest, as investment positions do not allow for borrowing. However, if people trade in US stocks, they will trade free due to the low commission on US stocks. The price of the NASDAQ will be tracked via a NASDAQ ETF. Thus, investing in an ETF provides similar coverage to the NASDAQ as purchasing several individual shares.
Trading Nasdaq-100 via Futures
NASDAQ futures are a derivative market that is based on the Nasdaq stock exchange. The CME is where the futures contract is traded and is carefully regulated, making it impossible to manipulate the market. The Nasdaq futures market is associated with the US's S&P 500 and Russell 2000 futures markets. Regardless of its association with the stock market, investors can trade the DJIA and the Nasdaq Index futures. When trading NQ futures, traders should be aware of specific stock moves, particularly those previously noted. This comprises earnings reports as well as any significant events that could have an impact on those equities.
Trading Nasdaq-100 via CFDs
CFDs or contract for difference enable traders to profit from price fluctuations without having to own the asset value. The amount of a CFD contract is determined by the change in price between the trade entries and exits. With CFDs, it is absolutely feasible to produce a Return on Investment (ROI) regardless of how prices move, as long as the transaction is correctly executed.
Trading Nasdaq-100 CFDs with eToro
There are a variety of accessible and basic ways to participate in contracts for diversification (CFDs) and perhaps profit from price changes. To begin, it is critical to select a reliable broker. eToro is the ideal embodiment of this because its operations are regulated.
Its social trading and investment platform allows its users to follow real-time statistics of the Nasdaq.
Traders must have an account, cash, target shares, and they could start buying shares in eToro. Traders must monitor their investment trading for the longer term. The market order buys at the actual market price, while the limit order specifies the exact price value of shares to buy the share.
When planning to sell it after the price increases, traders can set a target price to sell or a stop-loss to put a price to avoid losses. Therefore, it presents portfolio statistics in the form of unrealized and realized gains and losses.
How to Trade Nasdaq-100 in eToro?
- Create an account on eToro or log-in your account for existing users.
- Click "Discover".
- Select "Indices".
- Look for "NSDQ100".
- Select BUY or SELL.
- Key in your desired amount to invest or the number of Nasdaq-100 units you want to trade.
- Review and set the stop loss, leverage, and take profit parameters.
- Select "Open Trade".
Is It Wise to Invest in Nasdaq-100?
Investing in the NASDAQ-100 is a good option because it is a decent representation of market sectors. It is being placed in the position of 100 indexes wherein it is known as one of the world's preeminent large-cap growth indexes. Therefore, investing in the NASDAQ-100 is a smart option since it may help diversify investors' portfolios. In addition, the NASDAQ-100 has shown solid gains over time and can be a better opportunity for long-term investment.
Caveat emptor! NASDAQ-100 stocks are typically seen as more volatile than NYSE equities; however, it can yield a very high reward. Again, it comes with a major caveat, so hitting the brakes and assessing your risk appetite before jumping on the gas pedal is always a bright idea.
Ready to trade NASDAQ-100 with eToro?
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.