About Nasdaq 100 and Index Trading


Why Trade Indexes?

Any trading system based on index trading requires less capital investment and is more stable than the similar trading system applied to stock trading.

The price and volume of individual stocks fluctuate with unpredictable events such as news, rumors and earnings reports. By tailoring our indicators for the Indexes, we reduce the uncertainty by dealing with numerous stocks together. The volatility of any one stock in our indicators is diluted.

  • Less Capital Investment: You can buy the index directly as easily as you would a stock. The commissions are lower because you don't need to buy all the stocks within an index in order to track that index.
  • More Stability: The nature of indexes is that they are generally less volatile than the stocks they represent, as they are an 'average' of many different stocks. One doesn't need to worry much about news or the fluctuations of many individual stocks.
  • No Fundamental Analysis: The most important aspect of index trading (in our case Nasdaq 100 index trading) is that the fundamental analysis is already done by index managers (in our case by the NASDAQ). They analyze stocks on regular basis and they remove unstable and weak stocks by replacing them with stronger stocks. Therefore a trader may fully concentrate on the aspects of technical analysis.

Nasdaq 100 index Overview

The Nasdaq 100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not include banking or investment companies.

Launched in January 1985, the Nasdaq 100 Index represents the largest non-financial domestic and international issues listed on the Nasdaq Stock Market based on market capitalization. The Nasdaq 100 Index is calculated under a modified capitalization-weighted methodology. The methodology is expected to retain in general the economic attributes of capitalization-weighting while providing enhanced diversification. To accomplish this, Nasdaq reviews the composition of the Nasdaq 100 Index on a quarterly basis and adjusts the weightings of Index components using a proprietary algorithm, if certain pre-established weight distribution requirements are not met.

The number of securities in the Nasdaq 100 Index makes it an effective vehicle for investors. In January 1994, options on the Nasdaq 100 Index began trading on the Chicago Board Options Exchange. The Chicago Mercantile Exchange began to trade futures and futures options on the Nasdaq 100 Index in April of 1996. Nasdaq 100 Index Tracking Stock (QQQ) began trading on the American Stock Exchange in March 1999. In addition, the Index is used as a benchmark for financial products in many countries around the world.

RISK STATEMENT: The trading of stocks, futures, commodities, index futures or any other securities has potential rewards, and it also has potential risks involved. Trading may not be suitable for all users of this Website. Analyst research available through this Website does not constitute a recommendation or a solicitation any particular investor should purchase or sell any particular securities. Past performance is not necessarily an indication of future performance. You absolutely must make your own decisions before acting on any information obtained from this Website. More...
© 2024  NOS - www.Index-Trading-System.com. All Rights Reserved. - SV1

Disclaimer - Privacy
Technical FAQs