The NASDAQ is an index of the 100 largest non-financial companies listed on the Nasdaq Stock Market. It focuses on the top performing industries such as technology (54%), consumer services (25%), and healthcare (21%).

This index the index tracks the performance of the world’s most innovative companies, including Apple, Google, Intel, and Tesla. The NASDAQ is a benchmark primarily for the US tech stocks.

Imagine a basket of companies, which issue shares. The NASDAQ index follows up changes in their share prices. It’s well-know for its day-to-day volatility. That’s why it’s so attractive for traders around the world.

How is it calculated?

The NASDAQ-100 index is a modified market capitalization-weighted index. The value of the index equals the aggregate value of the share weights, also known as the index shares, of each of the index securities multiplied by each such security's last sale price, and divided by the divisor of the index.

This weighting allows limiting the influence of the largest companies and balancing the index with all members. No company on the Nasdaq-100 can have more than a 24% weighting.

How to trade NASDAQ with FBS?

You can trade contracts for difference (CFDs) on the NASDAQ. CFDs reflect the NASDAQ movement. It allows you to trade in both directions. In other words, you can gain as from the price going up as well as from it going down. Check contract specifications.

Also, you can use leverage. This means that with only a small amount of money you can control much bigger financial positions. Always remember that leverage gives you an opportunity to multiply your account. On the downside, you may lose a considerable part of it if the market goes against your trades.

What drives the NASDAQ price?

As mostly the technology sector index, the NASDAQ is driven by earnings reports, key appointments and new product launches. Moreover, the US economic factors such as interest rates, monetary policy and economic indicators in general can hugely influence the index as they impact company investment rates and consumer appetite for products.


2022-07-05 • Updated

Frequently asked questions

  • Can indices be traded on weekends?

    No, the markets are closed for trading on Saturday and Sunday. You can trade indices during market hours of a preferred index. Check the trading hours and plan your actions ahead.

  • What time can you trade indices?

    You can trade indices during the main market hours of a chosen index. For the US indices, trading hours start from 15:00 to 0:00 MT time. See a full list of market hours for indices trading.

  • How to start indices trading?

    The most popular way to start trading indices. Find out the best index funds to invest in. This financial instrument allows traders to profit from the difference between the opening and the closing price of an underlying asset – in this case, an index. You can trade indices in both directions, just as if you trade currency pairs. You can potentially profit from both rising and falling prices.

    For example, if you think the index will rise, open a long (buy) position. But if you think the index will fall, open a short (sell) position.

    To trade stock indices effectively, you first need to understand what their price depends on. It is generally driven by the news (e.g., earning reports), political issues, and global economic situation. It is also worth using technical analysis.

    Learn more about how to trade indices with videos from FBS market experts.

  • Is the Islamic account available for indices trading?

    No. The Islamic account (swap-free option) is not available for trading on indices instruments.

  • What are the risks of indices trading?

    Indices trading is considered a relatively secure form of trading, especially for a long-term investment, as you are spreading your risk across an entire segment of stocks as opposed to a single stock.

    However, some volatility risk still remains. Stock indices can go up or down for a variety of reasons. But unfavorable price moves can lead to losses, especially if you cannot react to a price change immediately.

    Collecting news and analysis will help you to make better decisions. It is also a good idea to use risk-management tools. Choosing tools such as Stop Losses, Limit Orders, and Trailing Stops will help you to protect yourself from volatility.

  • What is indices trading?

    Indices, or indexes, measure the price changes of a particular group of stocks over time. They allow trading the value of many companies as a single product. Stock market indices are also used to track how an industry, economy, or sector performs in general.

    Here are some of the world’s major indices:

    • Dow Jones (US30) – tracks 30 large, publicly traded US companies
    • S&P 500 (US500) – tracks 500 large-cap US companies
    • FTSE 100 (UK100) – tracks the 100 largest companies listed on the London Stock Exchange
    • Australia 200 (AU200) – tracks the 200 largest companies listed on the Australian Securities Exchange
    • Nikkei 225 (JP225) – tracks the 225 largest companies listed on the Tokyo Stock Exchange

    As the index is basically a figure that reflects the health of the market or economy, it cannot be bought or sold directly. Thus, you can trade indices via CFDs (Contracts for Difference), ETFs (Exchange-Traded Funds), index funds, index futures, or options.

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