What is the NASDAQ 100 index?
NASDAQ 100 index (NDX) is an index composed of the 100 largest non-financial companies quoted on the NASDAQ stock market according to their market capitalisation. It was established in 1985 as a weighted market capitalisation index with constituents coming from different industries. The tech industry is one of the most dominant ones. It is represented by well-known names such as Amazon, Apple, Microsoft and Alphabet. There is a balanced inclusion of large-cap companies coming from other sectors such as consumer goods, consumer services, healthcare, industrials and telecommunications.
Companies from the technology industry have the highest weight in the US Tech 100 index, with 56.41 per cent, while companies from the consumer services industry take the second largest weight with 24.9 per cent. In contrast, the telecommunications industry has the lowest participation, with a weight of 0.78 per cent. It means that US Tech 100 index can be used to see the overall health of the tech industry and other areas without the influence of the financial companies.
NASDAQ 100 index movements in the past
Financial reports, earnings level, new products and other company-related announcements and events can largely affect the NASDAQ 100 value. It is also positively or negatively affected by fundamental factors such as interest rates, overall monetary policy (especially in the US), as well as changes in other economic indicators and the level of economic activity.
Despite the numerous factors, the NASDAQ 100 has been in an uptrend during the last 5 years, except for the more expressed pullback from October until December 2018. During this period, there was a more significant decrease in the index price from 7,700 down to 5,900 after which the price bounced back and continued the upward trend.
During the five years since 2016, the NASDAQ 100 index recorded the lowest value of 3,945 in February 2016, whereas it achieved a 5-year peak at 9,680 in the middle of February 2020. However, the downturn in economic activity caused by the coronavirus lockdown resulted in more than 25 per cent decrease in value within a month. The value managed to bounce back and recover 2,000 points in the following couple of weeks.
Overall, when you look at the price chart, you can see that the index shows a tendency to move in a steady upward trend since its inception in 1985.
How to trade NASDAQ 100
NASDAQ 100 trading can be executed through different types of instruments and via a variety of financial companies such as brokers and investment funds. You can trade NASDAQ 100 with futures and options, investments funds or tokenised assets.
While the derivative instruments such as futures and options might provide certain benefits, they do come with some significant limitations. For instance, even though they are commonly traded in larger amounts, you will not be able to partly close your position before delivery date. Accordingly, your liquidity may be put at risk and also the futures may become worthless depending on the price movements of the underlying assets until the expiration period. So, futures are generally used by professional traders and investors who want to hedge their positions in the market.
Options can also be a practical trading instrument, but you may pay higher spread when you trade NASDAQ 100. Besides, don’t forget about the commission to the seller for each option irrespective of whether we decide to exercise the option or not. Trading costs issues can be found with mutual funds and Exchange-traded funds and you need to pay attention to the expense ratio. Additionally, you should be able to understand the operations behind different types of funds before you make your decision to trade.
Alternatively, you can trade NASDAQ 100 with the tokenised assets available at the Currency.com leveraged trading platform. Currency.com creates the tokens with blockchain technology which enables enhanced recording of data and transactions.
Additionally, by offering tokenised assets, the trading platforms reduce the intermediary costs. When you trade tokenised assets, you can speculate on the price movements of a tradeable asset without owning the asset itself.
Besides, you can multiply your profits when trading tokenised NASDAQ 100 index because not only the costs are lower but also because Currency.com offers a leverage of up to 1:100. You can open a position which can be up to 100 times of your available capital for your planned position, which ultimately means that you can make higher profits. Stated differently, when trading on Currency.com trading platform, you will be entitled to a margin of only 1 per cent of the position's value. From a monetary perspective, this means that you will put only 1 per cent of your own capital when you open a position with tokenised assets.
Another benefit of trading tokenised asset with Currency.com is that you can do it directly with crypto. So, you don't have to complete the process of selling your cryptocurrencies and collect the fiat money because you can deposit the crypto on your Currency.com account.
Tokenised NASDAQ 100 trading guide
Trading tokenised NASDAQ 100 index consists of the following steps:
- Step 1: Visit Currency.com trading platform and open an account by finalising the two-factor authentication security.
- Step 2: Choose what type of funds to deposit on your account. You can trade with crypto or with fiat.
- Step 3: Calculate the value of the position you want to open or you can calculate the size of the position based on your available capital and the 1 per cent margin. For example, a position of $10,000 (£8,035) would require that you have $100 (£80) of available capital when you trade tokenised NASDAQ 100 index. Of course, the profit you make will be calculated on the $10,000 position and your profit will be much higher compared to the amount you will earn if you trade some of the other instruments with a capital of $100.
- Step 4: The positions are opened in pretty much the same way as with other instruments. You take a long position if you anticipate price increase or you will go short with expectations for the price decline.
- Step 5: In this phase, Currency.com links the open positions between its clients and all unpaired buy or sell orders are hedged with Capital.com, LMAX Digital or, if needed, with Binance, Bitstamp, Kraken, NASDAQ, NYSE and Gain Capital.
- Step 6: In this step, you make the decision about the timing when to collect your profits. Here you may consider placing a take profits order.
Why trade tokenised NASDAQ 100 index with Currency.com
NASDAQ 100 trading at Currency.com tokenised securities exchange has a number of advantages. Tokenised assets are underpinned by robust and immutable blockchain technology. Opening a trade will give you a token that tracks and moves according to the underlying instrument's price.
- One-stop crypto trading platform
Trade tokenised NASDAQ 100 index with Bitcoin or Ethereum. Benefit from the commodity's price movements without turning your crypto assets into fiat.
Trade tokenised NASDAQ 100 index with a tight market spread, benefit from maker rebates and competitive taker fees.
Experienced traders can trade the world's top markets, like NASDAQ 100, with up to 1:100 leverage.
- Effective risk management
Manage your risks and secure your profits with stop loss and take profit orders. Save your assets with negative balance protection.
We have a scalable and low latency order management system, which can execute 50 million trades per second.
Currency.com operates under new Belarusian regulation with best-in-class AML and KYC laws. Regulatory details and fees are upfront.