How to trade the Nasdaq 100 (NAS100): composition, volatility, hours and risk

Trading NAS100 means trading a CFD on the Nasdaq 100, an index of 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is dominated by large technology and communication companies, so its daily moves are driven heavily by a small group of very big firms, by their earnings and by changes in interest rate expectations. It has historically been more volatile in percentage terms than the Dow or the S&P 500, which makes position size and stop placement more important, not less.

This guide is about the index and how it behaves. For the step-by-step sizing method shared by all the main index CFDs, see index CFD position sizing; here there is just one short example.

What NAS100 tracks

Most providers call the contract NAS100, US100, USTEC or US Tech 100. All of them refer to the Nasdaq 100, which Nasdaq launched in 1985. Two things define its membership:

• Listing. Only companies listed on the Nasdaq exchange qualify. A large company listed on the New York Stock Exchange is not eligible, however technology-focused it is.
• No financials. Banks, insurers and other financial companies are excluded by the rules. That is a structural difference from the S&P 500 and the Dow, which both hold large banks.

It is easy to confuse the Nasdaq 100 with the Nasdaq Composite, which includes nearly every share listed on Nasdaq, thousands of companies, including financials. News reports often quote the Composite when they say "the Nasdaq". The two usually move in the same direction, but they are different indices, and the CFD you trade almost always tracks the 100.

Membership is reconstituted once a year, in December, with the largest eligible companies by market value going in and those that have fallen down the rankings coming out. Weights are reviewed quarterly. Our general guide to what a stock index is explains these terms.

Weighting and concentration

The Nasdaq 100 is weighted by market capitalisation, with modifications. A pure market-cap index would let the biggest companies take an ever larger share; Nasdaq's methodology sets limits instead. Under the published rules, the quarterly rebalance is designed to stop any single company exceeding 24% of the index, and to stop the companies weighing more than 4.5% each from adding up to more than 48% in total.

Those limits still allow a lot of concentration. The largest members, typically household names in software, semiconductors, consumer technology, online retail and digital advertising, have together made up a large part of the index in recent years. In July 2023 Nasdaq carried out a special rebalance outside the normal schedule, because the combined weight of its biggest members had breached the concentration rules.

Worked example: how concentration moves the index

Illustrative weights only. Suppose the five largest members together make up 40% of the index and each rises 3% on a day when the other 95 companies are unchanged.

• Contribution of the top five = 40% × 3% = 1.2%.
• The index rises 1.2% even though 95% of its members did not move.

Now reverse it: the 95 smaller members rise an average of 1% while the top five fall 2%.

• Top five = 40% × −2% = −0.8%.
• Remaining members = 60% × 1% = +0.6%.
• Index = −0.2%. Most companies rose, yet the index fell.

This is the main thing to understand about NAS100. When you trade it, you are mostly taking a view on a small group of very large companies. Their news, and their earnings in particular, matter far more than the average member's.

What moves NAS100

Interest rates and bond yields

Technology and other growth companies are valued largely on earnings expected years from now. When bond yields rise, those future earnings are discounted more heavily, so their value today falls; when yields fall, the reverse applies. This is one reason the Nasdaq 100 has tended to react more strongly than the Dow to changes in expectations for Federal Reserve policy, inflation data and Treasury yields. It is a tendency, not a rule; there are plenty of days when yields and the index rise together. Our guides to bonds and yields and central banks and interest rates explain the link.

Earnings, especially from the largest members

Each quarter's reporting season is a major event for NAS100. Because of the weighting, a handful of reports can set the tone for the whole index for days. Many large US technology companies publish results after the 16:00 New York close. The shares then trade in extended hours, but a CFD priced from futures moves straight away, so NAS100 can jump in the evening and in Asian hours. Our guide to earnings season explains how reporting works and what traders look at.

Sector themes

Moves in semiconductors, cloud computing, artificial intelligence spending, online advertising or consumer devices can lift or drag the index as a block, because so many of its members are exposed to the same themes. Regulatory news, such as competition cases against large technology firms or export restrictions on chips, can also move it.

Risk appetite

When investors become nervous, high-valuation shares are often sold first, and the Nasdaq 100 tends to fall more than broader indices. When appetite for risk returns, it often leads. The VIX, which measures expected S&P 500 volatility, is a reasonable gauge of the mood in US equities generally.

How volatile is it?

Historically, the Nasdaq 100 has moved more in percentage terms than the Dow and the S&P 500, in both directions. Its history includes the dot-com bubble and bust: the Nasdaq Composite peaked in March 2000 and lost close to four-fifths of its value by October 2002, and the Nasdaq 100 fell by a similar order of magnitude. Large drawdowns also occurred in 2008 and 2022.

For a trader, higher volatility means three practical things:

• Stops need to be wider in points to sit outside normal noise. Check the daily ATR before setting one.
• Position sizes need to be smaller to keep the money at risk the same.
• Gaps and slippage are more likely around earnings and data.

Do not compare NAS100 and US30 by point moves. The two indices sit at different levels; compare percentage moves or ATR as a percentage of price.

When NAS100 trades

The underlying shares trade on Nasdaq from 09:30 to 16:00 New York time, Monday to Friday, except on US market holidays. In the UK that is usually 14:30 to 21:00. The Nasdaq 100 futures trade nearly 23 hours a day on weekdays, and most providers quote the NAS100 CFD from those futures outside the cash session.

• Around 08:30 New York. Major US data such as payrolls and CPI. NAS100 often reacts strongly to inflation figures because of its rate sensitivity.
• The cash open at 09:30. Usually the most active part of the day, with the widest ranges.
• Midday. Often quieter, with lower volume.
• Late session and the close. Activity picks up again, and FOMC decisions at 14:00 New York time (on meeting days) fall in this window.
• After 16:00. Earnings releases from large members can move the CFD sharply while the cash market is closed.
• Asian and European hours. Thinner liquidity and often wider spreads, with prices driven by futures and overnight news.

The market hours tool converts the US session into your time zone. If you want to understand what happens to the shares themselves outside regular hours, see pre-market and after-hours trading.

How NAS100 CFDs work

The contract mechanics are the same as for other index CFDs:

• Points. NAS100 moves in index points, quoted to one or two decimals.
• Value per point per lot. Set by the broker: 1, 10 or 20 dollars per point per lot are all used, among other conventions. Always check.
• Cash or futures-based. Cash contracts carry overnight financing; futures-based contracts expire and build the financing into the price. See trading index CFDs.
• Leverage. The Nasdaq 100 is on ESMA's list of major indices, so EU retail clients can be offered up to 20:1, a 5% margin requirement.
• Dividends. Many Nasdaq 100 members pay small dividends or none, so dividend adjustments on NAS100 tend to be small compared with indices full of high-yielding shares, but they still occur.

A short sizing example

Illustrative numbers only. Account 5,000 dollars, risk 1% per trade = 50 dollars. NAS100 is at 21,000 and the chart and the daily ATR suggest a stop 120 points away. The broker's contract is 1 dollar per point per lot with a 0.01 lot step.

• Lots = 50 ÷ (120 × 1) = 0.4167, rounded down to 0.41 lots.
• Money at risk = 120 × 1 × 0.41 = 49.20 dollars.
• Notional value = 21,000 × 1 × 0.41 = 8,610 dollars.
• Margin at 5% = 430.50 dollars.

A 120-point stop is about 0.57% of the index level. On a volatile day that might be a fraction of the range, so the stop has to come from the chart, not from a target size. Put your own broker's numbers into the position size calculator and margin calculator rather than relying on these.

NAS100 compared with US30 and US500

• Membership. NAS100 holds 100 non-financial Nasdaq-listed companies; US30 holds 30 companies chosen by committee across exchanges; US500 holds about 500 large US companies, including financials.
• Weighting. NAS100 and US500 are weighted by market value (NAS100 with caps); US30 by share price.
• Sector mix. NAS100 is heavily tilted towards technology and communication services; the S&P 500 is broader; the Dow has more industrials, healthcare and financials relative to its size.
• Behaviour. NAS100 has tended to have larger percentage swings and stronger reactions to rates and tech earnings.

See our guides to the S&P 500 and US30 for how those two behave.

A pre-trade checklist for NAS100

Because so much of NAS100's movement comes from a few companies and a few scheduled events, a short routine before each trade removes many avoidable surprises.

1. Check the earnings calendar for the largest members. If one of the biggest companies in the index reports tonight, any position held past the close carries the risk of a gap of several percent in that share, and a visible move in the index. Decide in advance whether you want that exposure.
2. Check the economic calendar. CPI, payrolls and FOMC days often bring the widest ranges of the month. Our guide to using an economic calendar explains how to read one.
3. Look at the recent daily range. Note the daily ATR in points and as a percentage of the index level. If your planned stop is a small fraction of a normal day's range, either widen it and reduce the size, or skip the trade.
4. Confirm the contract terms. Value per point per lot, minimum lot, lot step, trading hours, and whether the contract is cash or futures-based.
5. Check the session. If you are trading in Asian or early European hours, expect wider spreads and thinner liquidity than during the US session.
6. Count your related exposure. Open positions in US technology shares, other US indices or even a strongly correlated currency trade can add up to more risk than the single NAS100 position suggests.
7. Decide what happens if the price gaps. If a gap through your stop would cost far more than you planned, the position is too large for an overnight or weekend hold.

None of these steps tells you which way to trade. They make sure that whatever you decide, the size and timing match the risk you meant to take, and they are worth recording in a trading journal so you can review them later.

Common mistakes with NAS100

• Thinking you are trading "the Nasdaq". The CFD usually tracks the Nasdaq 100, not the Composite that headlines often quote.
• Ignoring after-hours earnings. Holding a position through a large member's results means accepting a possible gap of several percent when the report lands.
• Using a US30-sized stop. Stop distances do not transfer between indices. Base them on NAS100's own range.
• Overlooking concentration. A trader who is long NAS100 and also holds CFDs on several big US technology shares is taking much the same bet several times. See correlation.
• Chasing moves after CPI or FOMC. Spreads widen and prices can reverse quickly in the minutes after major releases.
• Over-leveraging. NAS100's percentage swings mean a high-leverage position can reach a margin call quickly. Most retail CFD accounts lose money; the ESMA review behind its 2018 measures found 74% to 89% did.

Frequently asked questions

Is NAS100 the same as the Nasdaq Composite?

No. NAS100 tracks the Nasdaq 100, which holds 100 of the largest non-financial companies on Nasdaq. The Composite includes nearly all Nasdaq-listed shares, thousands of them, including financial companies. They usually move in the same direction but are separate indices with different levels.

Why is NAS100 more volatile than US30?

Because of what it holds. It is concentrated in technology and growth companies whose valuations depend heavily on future earnings and interest rates, and a few very large members drive much of its movement. The Dow holds a broader mix of sectors. Over long periods, the Nasdaq 100 has moved more in percentage terms, though there are periods when the opposite is true.

Why does NAS100 move after the US market closes?

The CFD is priced from Nasdaq 100 futures, which trade nearly 23 hours a day. When a large member reports results after the 16:00 close, or major news arrives overnight, futures react immediately and so does the CFD, even though the regular stock market session has ended.

What is the best time to trade NAS100?

Activity and liquidity are highest during the US cash session, particularly the first hour after the 09:30 New York open and around major data and FOMC announcements. Spreads are usually tighter then. Outside those hours, liquidity is thinner and moves can be erratic. The right time depends on your approach and your ability to watch the trade.

Can a single company really move the whole index?

Yes, within limits. The largest members each carry a weight of several percent, so a 5% to 10% move in one of them after earnings can shift the index by a noticeable fraction of a percent on its own. The weight caps in the methodology limit how far this can go but do not remove it.

How much leverage can I use on NAS100?

For EU retail clients under ESMA rules, up to 20:1 on major indices, including the Nasdaq 100. Other jurisdictions and professional clients may have different limits. The leverage available is a ceiling, not a recommendation; the risk on a trade is set by your position size and stop, as explained in leverage and margin.