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Nasdaq Futures

The Nasdaq futures is a type of futures contract in which the underlying asset is the NASDAQ-100 Stock Index. NASDAQ-100 futures work on the same principles the S&P 500 futures. The NASDAQ-100 Stock Index Futures comprises 100 largest stocks that are traded on the NASDAQ system. The NASDAQ system also features some of the world’s best known technology companies like Google, Amazon, Apple, Cisco, Intel, Sun and Microsoft.

How does Nasdaq Futures work?

The NASDAQ-100 Futures are traded on the NASDAQ system. With its inception in 1971, NASDAQ is the short form for National Association of Securities Dealers Automated Quotations. It is also known as the second largest stock exchange in the US.

The value of Nasdaq futures pertains to minimal ticks of 0.5 that are worth $50. There is also a contract limit. No trader is allowed to go for more than 10,000 net long or short at any given time. The margins of Nasdaq Futures are similar to that of S&P 500 futures.

Options: Options are those financial instruments that provide its holders the right to trade the underlying asset at a predetermined price. A ‘call’ option gives a trader the right to buy the underlying asset at a given price. A ‘put’ option gives a trader the right to sell the underlying asset at a given price. This given price is known as the ‘strike price.’ The owner of an option has the right, but not the obligation, to buy or sell an asset.

It is advisable to start with paper trading or opting for an online trading simulator to understand the dynamics of the trade. Some of the effective techniques that could be applied for trading successfully in the Nasdaq futures include moving averages, the swing rule and pattern recognition.

Benefits of Trading Nasdaq Futures

  • Nasdaq futures are used for hedging, speculation and as a substitute for individual stocks.

  • It helps investors to simplify their exposure to stocks.

  • It is possible to make a large sum of money within a short period of time.

Risks of Nasdaq Futures

  • The initial margin is very small and relative to the value of the futures contract, which makes transactions leveraged or geared. This means that a relatively small movement in the market can have a larger, adverse impact on an investor’s fund deposits.

  • Some orders of the futures transactions may not be effective due to prevailing market conditions. Examples include stop-loss orders or stop-limit orders that are meant to limit your losses but may not do so due to market conditions.

However, the benefits like hedging and exposure to stocks make it possible for investors to make large sums of money through trading in Nasdaq futures within a short period of time.



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