Trading the Nasdaq 100 Index

What is the Nasdaq 100?

The NASDAQ 100 is comprised of the top 100 largest non-financial companies listed on the NASDAQ exchange. Notable companies on the index include: Amazon, Comcast, Cisco, eBay, Google, Marriott, Viacom, Whole Foods, and Yahoo. 

Unlike the Dow Jones Industrial Average, it includes companies based outside of the United States (excluding financial companies), and it is calculated as a modified capitalization-weighted index (like the S&P 500). The modifications reduce the influence of the largest companies and increase diversification. 

Be careful not to confuse the NASDAQ 100 with the NASDAQ Composite Index, which indexes all the stocks listed on the NASDAQ stock exchange. 

The NASDAQ 100: What You Need to Know

  • To be included in the index, a company must be listed exclusively on the NASDAQ, have an average daily trading volume of 200,000 shares, and keep up with quarterly and annual reports, among other requirements. 
  • The index is reviewed once a year and adjustments made accordingly based on share prices of the previous year (as of the last trading day in October) and publicly announced share totals (on the last trading day in November). Companies are dropped and added based on their market capitalization value. These changes, when anticipated, often lead to changes in the stock values of the affected companies. All changes are announced five business days in advance by press release. 
  • When trading the NDX, following the PMI (Pre-Market Indicator) can be helpful. This indicator predicts opening prices based on the last sale price from pre-market trading and takes into account overnight news, helping traders predict price movements. 
  • Because the stocks traded on the NASDAQ exchange are heavily skewed towards the technology sector, they tend to be more volatile, meaning the index can also move quickly. Traders should keep this in mind when deciding to trade this index. 

A trader who wants to trade the NASDAQ 100 Index should first perform a careful analysis of the relevant factors before trading.

Trade NASDAQ 100