Nasdaq 100 Index (2024)

The Nasdaq 100 is the US stock market index consisting of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. The majority of the companies listed in the Nasdaq 100 index are technology-oriented – found in the market sectors such as Information Technology, Communication Services, Health Care & Technology, and Consumer Discretionary/Staples.

The Nasdaq 100 index is capitalization-weighted, meaning the stocks' weights in the index are based on their market capitalizations. Therefore, the larger the company (measured by the market capitalization = stock price * the number of stocks issued), the more significant the impact on the index.

As of April 2022, the top 5 companies in the index are:

• Apple (with a 12.65% weight),
• Microsoft (9.8% weight),
• Amazon (7.23% weight),
• Tesla (4.77% weight), and
• Alphabet (3.7% weight).

Other famous companies included in the index are Nvidia, Broadcom, Intel, Adobe, Cisco, Qualcomm, Netflix, AMD, Paypal, etc.

Two Nasdaq indices

The other Nasdaq index, although less known, is the Nasdaq Financial 100, which consists of banking companies, insurance firms, brokerage firms, and Mortgage loan companies.

The technology Nasdaq 100 index is often confused with the Nasdaq Composite Index. The latter index (frequently referred to as "The Nasdaq") includes the stock of every company that is listed on the NASDAQ exchange (more than 3,000 companies) and therefore is not that sector dominant, such as the technology or the finance Nasdaq indices.

Nasdaq 100 calculation

The index is calculated by taking the total value of the share weights of all the stocks in the index, multiplied by each security's closing price. It is then divided by an index divisor to determine the current index value. As of April 2022, the Nasdaq 100 index oscillates in the 14,000 USD area.

The technology sector is usually more volatile than other sectors, thus making the Nasdaq 100 index a more risky play among investors. However, the returns tend to exceed the SP500 index.

Performance

As shown on the monthly chart of the Nasdaq 100 index, the long-term bull market has remained intact since the Financial crisis in 2008, and the index is up circa 1,250% from its post-financial crisis lows, making it the best performing index out of the US major benchmark indices. Over the years, there have been some corrections, but investors always “bought the dip,” pushing the index to new all-time highs. In early 2022, the index fell 10% amid rising inflation, US yields, and the war in Ukraine, and it is yet to see whether it is a start of a more significant correction or the bull market will continue.

_{Source: Purple Trading Metatrader 4}

Nasdaq 100 - quotes and trading

You can trade the technology index - Nasdaq 100 index in our Purple Trading Metatrader 4 platform. First, find the ticker NSDQ in the Metatrader 4 platform and press the new order button. The following window will pop up.

_{Source: Purple Trading Metatrader 4}

Lot value calculation

When you click on the NSDQ ticker in our Metatrader 4 platform, you can see that the spread between the Ask and Bid price is circa 2.00 USD during the times of high liquidity (usually when London and New York are open for trading).

The minimal volume for this index is one micro lot (0.01). If you trade a mini lot (0.1), you will gain or lose 2 USD for each USD the index makes. When trading half a lot, each USD of the index movement will yield 10 USD of profit/loss. For example, you buy half a lot at 14,000 USD, and the index goes to 14,100 USD. Your total profit will be 1,000 USD (calculated as 100 USD movement * 10 USD profit per each USD of the move). The same logic applies to calculating your profit or loss when entering a short position.

Keep in mind that this index is quoted in US dollars; thus, if your account is in EUR, each index point will yield slightly less in EUR, according to the actual EURUSD rate.

As with everything, you can trade at the current market price (market execution) or use pending orders (limit and stop orders). It's unnecessary to enter the stop-loss and take-profit order right now – you can open the trade without them and add them later.

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