The Nasdaq index (National Association of Securities Dealers Automated Quotation) is one of the main world stock market indexes and reflects the performance of technology companies listed in New York. Comprised of more than 3,000 companies, it has a total market value of over $11 trillion. The companies included in the index are leaders in their respective industries and represent some of the world’s best-known brands, such as Apple, Amazon, Facebook and Google.
Founded in New York on February 5, 1971, in just under 50 years since its inception, the Nasdaq has become one of the best known and most followed indices in the world. It is often considered a leading indicator of the US economy, and many analysts consider it a key indicator of the prices of technology stocks. The Nasdaq is also one of the most volatile indexes in the world, which means investors should be wary of investing in this index, especially if they aren’t already very familiar with its intricacies.
How to invest in the Nasdaq?
Investors can invest in the Nasdaq in several ways: by purchasing individual shares that are publicly traded, or by purchasing ETFs or mutual funds that track publicly traded companies.
For those who don’t want to make their own investment decisions, managed accounts and index funds are also available. However, the most suitable solution is offered by CFDs. Let’s analyze each of the proposed solutions in detail.
By following these steps, you can easily start investing in the Nasdaq with CFD contracts and take advantage of short selling, which allows you to make potential profits even if the index loses value for example we have the US Tech 100 Index which fall into this category.
Open an online trading account. Choose a broker that offers contracts for difference (CFDs) on major stock indices and make sure it is regulated and has no fixed commissions.
Fund your trading account. Deposit sufficient funds for the investments you intend to make. It is important to always invest in compliance with one’s risk appetite and one’s financial resources.
Carry out the trading order. Place an order with the broker by selecting the corresponding CFD contract and specifying the terms of the transaction. “Buy” if we assume that the value will go up, “Sell” if we think that the Nasdaq will lose value. Regularly monitor the operation. If necessary, adjust it to changes in market conditions.
Close the operation. When you are ready to close your position, submit an order to close the Nasdaq Index CFD contract.
Before investing in individual stocks listed on the Nasdaq, investors should do careful research about the companies they plan to buy. Some of the important factors to consider are the history and financial performance of the company over time, as well as various recommendations from an official rating agency such as Standard & Poor’s or Moody’s. Below are the best Nasdaq stocks by capitalization.
When investing in the Nasdaq, you should consider exchange-traded funds (ETFs) as a moderate-risk investment opportunity.
Listed below are some of the best Nasdaq-linked ETFs, which offer a convenient way to gain exposure to Nasdaq-listed stocks:
Invesco QQQ Trust (QQQ): This ETF tracks the performance of the NASDAQ-100 index. It is one of the largest ETFs with nearly $49 billion in assets under management.
S&P Technology ETF (XLK): This fund offers exposure to the Nasdaq-listed technology sector following the S&P Technology Select Sector Index.
Vanguard Information Technology ETF (VGT): This ETF offers exposure to technology stocks in the US and internationally, tracking the performance of the MSCI US Investable Market Information Technology Index 25/50.
Futures and options
Futures and options trading can also be a solution for investors looking for exposure to the Nasdaq.
These derivative products allow traders to buy or sell a security at a pre-determined price at a future date. This way traders can trade on the direction of an asset’s price movement, without actually owning it. Financial derivative instruments have been criticized for allowing excessive leverage when traded by inexperienced individuals, so investors should be wary of using them as part of their investment strategy.