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Trading US_Tech100, based on NASDAQ 100
The Nasdaq is a benchmark index for U.S. technology stocks and a global electronic marketplace for buying and selling securities. The term Nasdaq is also used to refer to the Nasdaq composite, which is an index of over 3,000 stocks that are listed on the Nasdaq exchange.
This exchange, in particular, includes the globe’s forerunners in technology and biotech such as Microsoft, Google, Oracle, Intel and Amazon to list a few. However, there is a difference between the Nasdaq composite and the Nasdaq 100, which is made up of 100 largest non-financial companies listed on the NASDAQ exchange.
Both are market capitalisation-weighted indexes that are made up of both US based and international stocks that represent the NASDAQ Global Select Market Composite. These stocks need to meet the strict liquidity requirements and need to adhere to corporate governance standards.
NASDAQ 100 History
Nasdaq 100 was launched on January 31st, 1985, by Nasdaq and started off with two separate indices: The NASDAQ-100 consists of retail, technology, telecommunication, health care, transport, etc. and the NASDAQ Financial-100 which consists of banking, insurance firms, mortgage and brokerage houses. By creating two indices, the NASDAQ hoped that options and futures contracts would be created on the basis that other mutual funds would adopt the same principles on their benchmarks.
The base price of the index was set at 250 and closed at 800 on the last day of December 1993, the base was reset at 125 on January 1st, 1994 leaving the NASDAQ 100 price below that of the more popular NASDAQ Composite.
The all-time highs for the index were welcomed by the dot-com bubble that was in 2000 where they stood above the 4,700 level. In 2002 the markets started evolving to the recession and the September 11th attacks and the Afghan War that saw the index drop to the 900-point level during this period. The recovery took 5 years and eventually the index corrected itself on February 16, 2001 and high of 2,239.51-point level. The late-2000s recession the U.S. saw the housing bubble and Global Financial Crisis of 2008, with a correction at below 2,000-point level. While the Nasdaq 100 also experienced a limit down on October 24th, 2008, and as a result on November 20th, 2008 the index reached a 6-year intraday low of 1,018.
The Quantitative Easing (QE) from the Fed (Federal Reserve) was what brought in the end of the financial crisis, the index started on a volatile four-year climb, and on May 15th, 2013 closed above 3,000. Thanks to GOOG (google Inc.) on the October 18th, 2013, the index closed at a high of 3,355.63 as each Google’s share was sold for more than $1,000. Finally, the index reached 4,593.27 as 2015 came to a close.
NASDAQ 100 Index composition
The Nasdaq 100 includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market and is calculated based on modified market capitalisation-weighted methodology. Every quarter the Nasdaq will be reviewed, and the composition of the Nasdaq 100 index weightings are adjusted according to its components by means of a proprietary algorithm, and if the composites do not meet pre-defined weight distribution requirements, they are excluded.
|Companies||Index weighting (%)|
|NVIDIA corpIntel Corp||2.67%|
|Paypal Holdings Inc||1.86%|
Factors that influence the overall index price
It is always handy for traders to follow the PMI (Pre-Market Indicator), as it predicts opening prices based on the closing price of the last sale from the pre-market trade. This PMI also takes into consideration overnight news, hence assisting traders in market predictions.
As opposed to broader market indices like Russell 2000 index, the main factors that influence the Nasdaq stocks are heavily skewed towards the technology sector. The stocks are more volatile and change direction quickly.
Another wise move is to monitor the dollar index that reflects USD strength, which affects the American companies.
US_Tech100, Based on NASDAQ 100 Trading information
- The US_Tech 100 CFD instrument is a derivative contract, based on the NASDAQ 100 futures contract (called the E-Mini), and is tradable from 22:00-20:14 & 20:30-20:59 (GMT), Monday to Friday
- The US_Tech100 price moves in increments of 0.25
- The minimum trade size is 1 unit
- The currency of the Nasdaq 100 is the U.S. Dollar
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