Ultimate guide to trading the Nasdaq 100 index
Learn what this index is, how it has performed and some strategies for trading it.
* Trading is risky. Your capital is at risk.
Even if you've never traded before, you've probably heard the name "Nasdaq 100" thrown around - usually when tech stocks are having a big day. But what actually is it?
Put simply, the Nasdaq 100 is a list of 100 of the biggest non-financial companies listed on the Nasdaq stock exchange in New York. Think the names you already know: Apple, Microsoft, Nvidia, Amazon, Tesla. It's heavily weighted towards technology, which is why people treat it as a kind of health check for the whole tech sector.
You can't buy the index itself: it's a benchmark, not a product. But there are several ways to get exposure to how it moves, and this guide walks through what the index is, how it works, and what you'd want to understand before going anywhere near it.
Key takeaways
The Nasdaq 100 tracks 100 large non-financial companies listed on the Nasdaq exchange, leaving out banks and financial firms
Technology makes up well over half the index, so when the big tech names move, the whole index tends to move with them
You can't invest in the Nasdaq 100 index directly. You gain exposure indirectly through ETFs, futures, options, or CFDs. Each has different costs and risks
What is the Nasdaq 100 index?
The Nasdaq 100 Index (FXTM MT ticker: NAS 100) is a prominent stock market index that tracks the performance of 100 of the largest, most actively traded domestic and international non-financial companies listed on the Nasdaq stock exchange in New York.
Established in January 1985 by the Nasdaq Stock Market, the Nasdaq 100 Index is known for its focus on technology and internet-related industries. This makes it a key indicator of the health and growth of the high-tech sector, which in turn can influence investment strategies and guide portfolio decisions. Additionally, it serves as the basis for numerous financial products around the world, including ETFs, mutual funds, futures, and options.
It offers investors and financial professionals a snapshot of key players in industries like technology, health care, discretionary consumer, and communication services.
The Nasdaq 100 Index is weighted by market capitalisation, also known as market cap, being the market price per share multiplied by the number of outstanding shares per company. Further, it's a modified market-capitalisation-weighted index, meaning it reflects the market values of its companies, with a focus on larger market capitalisations but includes measures to prevent overconcentration.
Managed by the Nasdaq Stock Market, the index undergoes periodic rebalancing to reflect the evolving market and represent its diverse companies accurately. With quarterly rebalancing and a commitment to capture the pulse of the technology-driven economy, the Nasdaq 100 is a key player in financial benchmarks, providing valuable insights into the changing dynamics of the global marketplace.
Industries and companies
The NASDAQ 100 sets itself apart from other US indices by not including financial companies, highlighting its focus on innovative industries.
This structure not only shows performance but also mirrors the changing global economy, where technology and transformative industries shape the future.
As a technology-centric index, more than 57% of its weight is within this industry, including heavyweights like Apple and Microsoft.
Consumer discretionary, for non-essentials such as vehicles, vacations, fast food, furniture and appliances, follows at 18.74% weighting, with health care in third place with 7.12%.
NASDAQ 100 industry breakdown
| Industry | Weight | Securities |
|---|---|---|
Technology | 58% | 45 |
Consumer discretionary | 22% | 18 |
Consumer staples | 6% | 8 |
Health care | 4% | 9 |
Industrials | 3% | 14 |
Telecommunications | 3% | 2 |
Basic materials | 1% | 1 |
Utilities | 1% | 4 |
As of June 2026
Top 10 NASDAQ 100 companies by weight
| Ticker | Company name | Weight |
|---|---|---|
NVDA | Nvidia | 7.63% |
AAPL | Apple | 6.51% |
MU | Micron | 6.09% |
MSFT | Microsoft | 4.22% |
AMZN | Amazon | 3.93% |
AMD | Advanced Micro Devices | 3.86% |
GOOGL | Alphabet (Class A) | 3.22% |
TSLA | Tesla | 3.02% |
GOOG | Alphabet (Class C) | 3.01% |
INTC | Intel | 2.97% |
As of June 2026
Alphabet Inc (the company behind internet giant Google) features twice. The separate tickers are for each share class the company offers publicly. Class A for shares with voting rights and Class C without.
Eligibility, weighting and rebalancing
The Nasdaq 100 features 101 securities from 100 companies.
Eligibility
To be considered for inclusion in the Nasdaq 100, securities must meet all the following initial selection criteria:
- Listed exclusively on a Nasdaq exchange.
- Classified asnon-financial.
- Be common stocks, ordinary shares, American depositary receipts (ADRs), or tracking stocks.
- Traded for at least three full calendar months on an exchange, with a minimum average daily trading volume of 200,000 shares (measured over the previous three calendar months).
Weighting
The Nasdaq 100 is a modified market-capitalisation-weighted index, meaning that companies are assigned weights based on their market capitalisation, as a share of the total market capitalisation of the index. In simple terms, the larger a company's market capitalisation, the more weight will be assigned.
Equal weighted
Market cap weighted
Weighting of the constituent stocks changes continuously based on changes in stock prices and market capitalisations.
Rebalancing and reconstitution
Rebalancing of the index is conducted at set times throughout the year to restore and maintain the composition of the index to its target or original weights. This may involve the buying or selling of shares of specific stocks to realign weights.
Quarterly rebalancing
The index rebalances the weight of constituents on a quarterly basis in March, June, September, and December. This takes place after the close of the market on the last Friday of each of the above months.
Annual reconstitution
In December of each year, the index undergoes a reconstitution to make sure the index continues to reflect the strategic intention, being the top 100 largest and most actively traded non-financial companies listed with the Nasdaq stock exchange, in line with the eligibility criteria. This process is done using market data as of the end of October and total shares outstanding as of the end of November, being the reference date.
It's at this point that companies reflected in the index may change. The constituent weightings are adjusted where necessary and the 'new' index becomes available on the first trading day of the new year.
Special rebalancing
Special rebalancing can take place at any time that the weight conditions of the index securities aren't met, and an overconcentration occurs. It won't result in the removal or addition of securities, but rather a redistribution of the weights.
The Nasdaq 100 has only ever conducted a special rebalance three times. In 1998, 2011, and on 17 July 2023.
The special rebalance in July 2023 was triggered by a rally in tech stocks and Tesla shares. This pushed the combined weight of the top five companies, being Microsoft, Apple, Nvidia, Amazon, and Tesla, above the 48%limitation. The rebalancing reduced their weights and increased those of companies like Alphabet, Meta Platforms, Netflix, and Costco.
Performance of the Nasdaq 100
Technology has infiltrated every aspect of our lives. Each day we interact with products and services from hundreds of brands that offer us convenience and comfort and help us be more productive, efficient, and accurate than ever before.
From mobile phones and computers to new energy vehicles and artificial intelligence, the products of the Nasdaq 100 companies are directly linked to the mainstream lifestyles of global consumers. And thanks to ongoing advancements in development and widespread adoption, the Nasdaq 100 has produced impressive results in growth and performance.
Factors that influence the price of the Nasdaq 100
The Nasdaq 100 price is influenced by various factors, with its performance being shaped by both the individual stocks within the index and external fundamental drivers.
1. Performance of individual stocks
The price of the Nasdaq 100 is sensitive to the performance of its constituent stocks. Elements such as earnings reports, important appointments, and the introduction of new products can impact the performance and prices of individual stocks.
Consequently, these factors can have a cascading effect on the overall index value. The weighted nature of the index means that events affecting the larger constituents exert a more pronounced influence on the broader index price.
2. Fundamental drivers
The Nasdaq 100 is also influenced by broader economic factors, particularly within the United States. Variables such as interest rates, monetary policy, and general economic indicators play a role in shaping the index's performance. Additionally, economic conditions impact company investment levels and consumer demand for products, further influencing the overall index value.
Being a tech-heavy index, any noteworthy developments, advancements, or detractions in this field can impact the price significantly. This was particularly pronounced in 2023 with artificial intelligence making headway into the mainstream market and companies across most sectors considering the application of Al in their products and services.
Market capitalisation growth
The total market capitalisation of the Nasdaq 100 roughly stood at $13.5 trillion at the end of 2025.
It's interesting to see how the total Nasdaq 100 market cap has grown in both size as well as a percentage of the total New York Stock Exchange (NYSE) market capitalisation. The table below highlights this growth, with a peak in both market cap and ratio of the NYSE being seen in December 2023.
Nasdaq 100 market cap (1985-2025)
| Date | Nasdaq market cap | % of total NYSE market cap |
|---|---|---|
February 1985 (initial launch) | $58bn | 3% |
December 1990 | $109bn | 4% |
December 1995 | $409bn | 7.2% |
December 2000 | $2,218bn | 19.4% |
December 2005 | $1,932bn | 14.5% |
December 2010 | $2,498bn | 18.7% |
December 2015 | $5,284bn | 25.9% |
December 2020 | $14,721bn | 51.5% |
December 2025 | $31,500bn | 72% |
Price performance
The index was created in 1985 with a base value set to 250 on 1 February 1985. After reaching a level of nearly 800 on 31 December 1993, the index level was halved to 125 for the next trading day, being 3 January 1994.
Points growth
If we look at the 5-year chart from December 2018 to December 2023, as shown below, we can see that the index experienced a low of 6,147 in early 2019 and a high of 16,906 just before markets closed for 2023. Over the 5-year period, the index saw an overall growth of around 142%.
Annual returns
The chart below highlights the returns of the Nasdaq 100 index per year since 1986. Returns are calculated from the closing price of the last trading day of the year to closing price of the last trading day the next year.
Annual returns of the Nasdaq 100 index have been overall positive, with a record high for the last decade of 53.81 attained in 2023. This was largely fuelled by substantial interest and investment in artificial intelligence and exponential growth in the market capitalisations of the 'Magnificent Seven' big Tech firms.
The years that have closed in the red have been times of general economic turmoil. Primary reasons for losses have been attributed to the following main factors at the time:
- 1990: Gulf War
- 2000 - 2002: Dot com crash
- 2008: Subprime mortgage crisis
- 2018: Trump administration 'war' on China trade
- 2022: Aggressive Federal rate increases
Returns from 2004 to 2023 are tabulated below, indicating the specific returns reached.
Nasdaq 100 index composition
When comparing the Nasdaq 100 to other popular stock indices, specifically the S&P 500, Dow Jones Industrial Average and the Russell 2000, the Nasdaq takes top position in terms of YoY performance.
S&P 500
The Standard and Poor's 500, or simply the S&P 500 (FTM ticker US500), tracks the stock performance of 500 of the largest publicly traded companies in the United States. Like the Nasdaq 100, the S&P 500 is a market-capitalisation-weighted index.
A key difference between the S&P 500 and the Nasdaq 100 is that the S&P 500 includes companies across various sectors - including finance - and, as such, is more diverse than the Nasdaq 100.
Dow Jones Industrial Average
The Dow Jones Industrial Average (FXTM ticker - US30) consists of 30 large, blue-chip U.S. companies across is a variety of sectors. The DJIA isa price-weighted index, meaning that the price of each component's stock determines its weight in the index, regardless of market capitalisation value.
Compared to the Nasdaq 100 and the S&P500, the DJIA is not as diverse and represents a much smaller number of companies.
Russell 2000
The Russell 2000 is a small-cap stock market index that includes 2,0000 of the smallest publicly traded companies in the United States. The Russell 2000 is a market-capitalisation-weighted index designed to measure the performance of smaller companies, or small-cap stocks.
The chart below shows the growth performance of the various indices over the last decade.
Nasdaq 100, shown in orange, is up 1207% for the period, followed by the S&P 500 in blue at 491%, the Dow Jones Industrial Average in green at 327%, and the Russell 2000 in grey at 306% growth.
While the chart pattern for each index is almost identical, the growth of the indices focused on large-cap companies is at exponentially higher levels. This confirms the notion that bigger companies, most especially those within the technology space with strong innovation capacity and ability, have been primary contributors to market growth.
For the Nasdaq 100, with a focus on these types of companies, this has translated into an outstanding price history with compelling long-term performance.
How to trade or invest in the Nasdaq 100
As an index, essentially serving as a benchmark, you aren't able to directly trade or invest in any index, but you can gain exposure to the performance through a number of indirect methods.
Exchange-traded funds (ETFs) and mutual funds are two of the easiest ways to gain exposure to the Nasdaq 100, with plenty available globally.
Nasdaq 100 futures can be a great hedge against swings in tech earnings because they offer multiple kinds of protection.
Options tracking Nasdaq 100 provide investors with multiple opportunities to make a profit. Options allow investors to hold stocks while controlling drawdown risks, whether protecting portfolios against market corrections, hedging risk, or enhancing returns.
Nasdaq 100 annuity products are a good option if you're investing in a long-term retirement vehicle or life insurance. These annuities have consistently performed well over time and are a great barometer of todays' economy, too.
Trading with Contracts for Difference (CFDs)
Index futures, options, ETFs and other trading instruments allow investors to invest in or speculate on the Nasdaq 100. Each have their own strengths and advantages, as well as their potential pitfalls.
For example, exchange products such as ETFs may be far less volatile than leading stocks. Futures and options come with higher eligibility requirements, are riskier, and have complex tradingrules. And annuities may be more suitable for US-based investors.
In recent years, Contracts for Difference (CFDs) have been gaining traction among market participants as a popular derivative instrument.
Created in the UK in the late 20th century, CFDs and futures are similar in that you don't hold assets directly, have margin requirements, and offer leverage and the opportunity of bidirectional trading.
However, CFDs come with low investor eligibility requirements, offer flexible leverage, have no issues with expiry rules, and do not involve delivery of physical commodities- advantages that futures do not have. Therefore, CFDs are increasingly favoured by traders around the world.
If you buy and hold CFDs over time, you don't have to periodically close your position and enter the next month's futures, thereby avoiding the conundrum that liquidity dries up before the delivery date amplifying price volatility. In general, trading CFDs is more flexible and convenient than futures contracts.
As a licensed broker, FXTM offers CFD trading tools for all major index futures that match their prices and trading hours, freeing investors from worries about complex futures trading rules such as maturity and delivery.
Clients trading CFDs are only required to pay a certain amount of margin to the broker, which offers long and short trades. Trading is more flexible than ETF buy/redeem rules, allowing the clients to buy, sell or close their positions around the clock, making short-term speculation and long-term investment straightforward. Investors can choose their desired leverage level to use their funds more effectively.
In addition, the FXTM MTS platform also lets you trade a large number of Nasdaq 100 constituents, making trading much easier for non-US traders skilled in individual stock investment and speculation.
Trading strategies for the Nasdaq 100
Short and mid-term speculation
Constituents of Nasdaq 100 boast excellent financial performance and superior growth. Cumulative and annualised returns on the Nasdaq index in more recent years have been predominantly positive.
A simple "buy-and-hold" strategy can capitalise on the long-term returns of high-quality individual stocks. However, this strategy ties up a significant amount of capital for a long time, and long-term investments are not suitable for all traders due to differences in individual preferences.
By comparison, CFDs (which provide leverage) can shorten the time the asset is held, enabling investors to potentially obtain higher profits with less holding time compared to conventional products.
The volatile nature of tech stocks also poses a challenge to the"buy-and-hold" strategy. Financial markets are rarely calm. Frequent "surprises" can cause sharp swings in the stock market
Fortunately, the bidirectional nature - being able to go long or go short - and flexibility of CFDs can help speculators to avoid risks or capitalise on rallies.
Position and risk management
If you're already an investor in the US stock market, Nasdaq 100 CFDs can also serve as a useful complement.
When an investor allocates funds to a number of individual stocks or indices at the same time, they may struggle to withdraw funds completely under unfavourable market conditions. CFDs can be relied on for hedging - entering a CFD position with the opposite direction and equal amount to the previous trade.
If your position shrinks, the loss can be compensated by the profit of the CFD in the opposite direction. The bidirectional nature of CFDs allows you to hedge your position, whether it's long or short
With relatively and comparatively low transaction costs and simplicity of trading, CFDs help traders and investors to effectively manage both their position and risks.
Instant trading
As an over-the-counter (OTC)instrument, CFDs are more flexible and offer lower costs than standardised exchange trading.
First, when trading an index through CFOs, you have the flexibility to go long or short. When trading Nasdaq 100 with CFDs, you sell (short) if you believe that the stock index will fall and buy (long) if you expect it to rise.
At the same time, you can participate in the market with your preferred investment size and leverage. If you are good at technical analysis and capture short and mid-term index movements, CFD contracts can be a lucrative trading tool.
While leverage effectively expands your investment capital, you need to be aware of the margin ratio. For example, FXTM offers a margin ratio of 25:1, meaning your margin will be1/25 of the trade's total exposure. Therefore, a $10,000 position would only require a minimum margin of $500.It's crucial to understand the risks involved here, and that the opportunity for greater profit also comes with the potential of exponential losses.
Outlook for the Nasdaq 100
The outlook for investing in the NASDAQ 100 is promising, as this index represents a collection of some of the largest and most innovative companies in the technology sector. The index includes all of the 'Magnificent Seven' being Nvidia, Microsoft, Meta Platforms, Amazon, Apple, Tesla, and Alphabet. These companies have consistently demonstrated strong growth and are at the forefront of technological advancements, making the NASDAQ 100 an attractive investment option for both short-term traders and long-term investors.
One of the key advantages of investing in the NASDAQ 100 is the potential for significant returns. The technology sector has been one of the top performers in recent years, delivering substantial gains for investors. The companies listed on the NASDAQ 100 have proven their ability to innovate and adapt to changing market conditions, which has translated into impressive financial performance. With advancements in areas such as artificial intelligence, cloud computing, and e-commerce, these companies are well-positioned to continue their growth trajectory and deliver strong returns for investors.
Furthermore, investing in the NASDAQ 100 provides exposure to a diverse range of industries within the technology sector. This index includes companies from various sub-sectors such as software, hardware, internet services, semiconductors, and telecommunications. By investing in the NASDAQ 100, investors can gain exposure to multiple high-growth areas within the technology sector, reducing their risk and increasing their profit potential. This diversification also allows investors to capitalise on emerging trends and opportunities within the tech industry.
Another reason to consider investing in the NASDAQ 100 is its global reach. Many of the companies listed on this index have a global footprint and generate significant revenue from international markets. This global presence exposes investors to various economies and markets worldwide, diversifying their investment portfolio beyond domestic markets. As technology continues to reshape industries globally, companies within the NASDAQ 100 are well-positioned to benefit from this trend and generate substantial revenue from international markets.
In conclusion, the outlook for the NASDAQ 100 is highly favourable. The index represents a collection of some of the largest and most innovative companies in the technology sector, which have consistently demonstrated strong growth and profitability. Investing in the NASDAQ 100 provides exposure to a diverse range of industries within the tech sector, offering the potential for significant returns and diversification benefits. With its global reach and ability to capitalise on emerging trends, the NASDAQ 100 is an attractive investment option for both short-term traders and long-term investors.
Frequently asked questions
The Nasdaq 100 is a stock market index that tracks 100 of the largest non-financial companies listed on the Nasdaq exchange in New York.
It's dominated by technology firms like Apple, Microsoft, and Nvidia, which is why it's often used as a gauge for how the tech sector is performing overall.
The main difference is what they include. The S&P 500 tracks 500 companies across every sector, including financial firms, so it's more diversified.
The Nasdaq 100 holds only 100 companies and excludes financials entirely, giving it a much heavier tilt towards technology.
In short: the S&P 500 is broader, the Nasdaq 100 is more concentrated in tech.
No. An index is a benchmark, not something you can buy outright. To get exposure to its performance, you'd use an indirect product such as an ETF, a mutual fund, futures, options, or a CFD. Each works differently and carries different levels of risk, so it's worth understanding your options before committing any money.
A CFD (Contract for Difference) lets you speculate on whether the index will rise or fall without owning any underlying asset.
You can go long (betting it rises) or short (betting it falls), and you trade using margin meaning you put down a fraction of the full position size. This is where leverage comes in: it can increase your profits, but it can just as easily increase your losses. CFDs are a higher-risk product and aren't right for everyone.
By design, the index only includes non-financial companies, and the largest non-financial companies on the Nasdaq happen to be technology and internet businesses. As a result, technology makes up more than half the index's total weight.
This is what gives the Nasdaq 100 its reputation as a tech barometer, but it also means it can be more volatile than a broader, more diversified index.