Nasdaq is a global electronic marketplace for trading and buying securities. It was the world’s first electronic exchange. It operates in around 25 markets and contains listings of its technology giants, including Apple and Facebook. Moreover, Nasdaq has the five central securities depositories in the United States and Europe. The Nasdaq also lists popular cryptocurrencies.
Nasdaq launched by the National Association of Securities Dealers (NASD), is currently known as the Financial Industry Regulatory Authority (FINRA).
For your information, Nasdaq is a term used to indicate index as well. Since we are concerned with Nasdaq CFD trading here, we’ll focus on CFD Nasdaq 100, its practical example of trading, and learn about the CFD Dow Jones simultaneously.
Because of the way people commonly use phrases “the Nasdaq” and “the Dow,” both these terms are synonymous with instances in “the market” or “the economy.” Yet, this reflects an inaccurate impression of the actual meaning of these terms.
“The Dow” generally means the Dow Jones Industrial Average (DJIA), a crucial index that many people pay attention to determine their overall stock performance. However, the DJIA is not synonymous with Dow Jones and Company, a firm owned by News Corp., and publishes the periodical called The Wall Street Journal.
The Wall Street Index’s CFD trading allows leveraged exposure to the US stock market and will enable you to track equities’ performance on Wall Street today. The CFD is traded via the Dow Jones Industrial Average Index (DJIA), listing 30 major US companies selected to offer a cross-section of the US economy.
Similarly, to trade CFD Nasdaq, you have to look for the Nasdaq stock index. So, let’s learn more about the Nasdaq CFD trading below without any further ado!
Part 1: What is Nasdaq CFD?
The Nasdaq composite, quite heavily weighted in favor of tech stocks, creates a separate stock index, the Nasdaq-100.
The Nasdaq composite index, or Nasdaq in brief, is a primary US stock index consisting of a capitalization-weighted bucket of individual stocks traded on the NASDAQ stock exchange.
The bundle of stocks gets heavily weighted towards US-based tech stocks, such as Microsoft, Apple, Google, and more. Approximately 90% of the index’s compositions are tech stocks found in the separate stock index, the Nasdaq 100, upon which you can trade Nas100 CFD via regulated brokers.
Understanding the Nasdaq
The Nasdaq composite index is an instrument for both traders and investors. Investors buy assets holdings, while traders usually trade CFDs via this stock index.
Both categories can obtain profit from price fluctuations driven by supply, demand, and general market volatility.
Creation of The Nasdaq
The Nasdaq, first traded in 1971, was at only a 100 starting value. Today it trades 10,000 plus pretty well and recently set an all-time high record in 2020.
Currently, it consists of 3000 plus US stocks or securities. To be eligible for the composite, the protection or stock must be exclusively traded on the NASDAQ stock exchange and comes among one of these sections, including
CFD Nasdaq 100
- American Depositary Receipts (ADRs)
- Common Stock
- Limited Partnership Interests
- Ordinary Shares
- Real Estate Investment Trusts (REITs)
- Shares of Beneficial Interest (SBIs)
- Tracking Stocks
Part 2: How to trade Nasdaq and what is Nasdaq 100?
As discussed earlier, the Nasdaq 100, also called the Nasdaq Tech 100, is a smaller capitalization-weighted index comprising 103 securities issued by the top 100 tech companies listed on the Nasdaq stock exchange. So, this now clears the concern that Nasdaq and Nasdaq 100, including Nasdaq 100 CFD, are two different concepts though related closely.
How to trade Nasdaq
Investing in tech stocks has historically proven highly profitable for investors, and these US-based tech companies represent the largest in the world.
Traders, however, can trade the volatility that happens during major macroeconomic events such as natural disasters, recessions, pandemics, wars, and more.
For instance, the Nasdaq ballooned due to tech stocks during the dot com bubble but later crashed after the bursting of the bubble. Investors were devastated, but volatility proved to be ideal for traders.
While trading CFD Nasdaq 100 also, traders can utilize active day trading and swing trading techniques to profit from the stock index’s wild volatility and sudden price movements. In addition, the same technical analysis indicators can be useful for each trading style and similar risk management strategies.
Part 3: A Practical Example to trading CFD Dow Jones
After understanding the entire concept of Nasdaq CFD trading in brief and how Nasdaq goes up, CFD goes down, it’s time to look at CFD Dow Jones trading with this practical instance.
Many traders used trade the Dow Jones Industrial Average (DJIA), popularly called the Dow, because of the volatility of the American market. And, it’s pretty simple to execute this trade via contracts for difference (CFDs). The Dow comprises 30 major US companies or US30 CFD, a much smaller number than various indices, and they are carefully weighed and selected to offer a US economy cross-section.
1. Requisites of Dow Jones CFD Trading
As always prescribed, you are required to study the charts and other analysis methods to anticipate the direction of the index. Therefore, even though only 30 companies or CFD US 30 are worth analyzing each separately and summing the outputs.
The Dow answers well to technical analysis and performs great as a composite price. For instance, even though the index arranges from various stock values, you can observe the price finding resistance and support at whole numbers such as 10,000, 11,000, and 12,000.
When trading Dow CFD on Dow CFD weekend, you need to be aware of the major factors that impact the US markets. Practical news releases every day show some impact, but the ones that seem to impact the most are the money supply and the jobless figures. Some essential indicators of the market strength are the market breadth, which compares the decliners and advancers.
You can look for if the other stocks in the US markets well resonate with the DJIA. It represents that there’s not much strength to any moves if they don’t resonate well. When looking for the strength confirmation, various people refer to the Traders Index (TRIN), which sums various declining and advancing issues with the volume.
2. Trading the Dow Jones: CFDs Example
At a certain CFD provider, each full-sized Dow Jones CFD contract corresponds to an exposure of $10.
Thus, a trader who is willing to risk $1500 would easily trade one contract.
Here’s an example of trading the Dow Jones Industrials. The margin requirement per contract may be $50, with a spread of six pips and a pip value of one dollar. Going with your broker’s quote of 10816 – 10822, it’s easy to go with ten contracts for an initial margin of $500 for 10822.
Consequently, it happens that you are controlling $108,220 worth of Dow Jones CFD contract.
Assuming your anticipation of price going up, you may have quoted later in the day at 10857 – 10863, an increase of 41. You can close your position at 10857 after capturing 35 points — where the other six points are lost in the spread that might cover your broker’s fees.
So, you’ve gained $350 on the trade at $10 per point.
Trading the Dow is quite famous because of the US markets transparency and the easy access to American information and news resources. Familiarity is vital in being able to predict the potential moves in the market.
Part 4: A Full-Fledged Comparison Chart to Trading DJ CFD On Top Trading Platforms
|Brokers||Regulation||Spreads From||Products||Platforms||Funding Methods|
|AvaTrade||Central Bank of Ireland, ASIC, IIROC, FSA, FSB, UAE, and BVI||EURUSD:
|Forex, Indices, Stocks, Cryptocurrencies, Commodities, and ETFs.||MT4, MT5, Web Trader, and Mobile App.||Credit Cards, PayPal, and Bank Transfer|
|Forex.com||Financial Conduct Authority||EURUSD:
|Forex, Indices, Stocks, Commodities, and ETFs.||MT4, Web Trader, and Mobile App||Credit Cards, and Bank Transfer|
|Axitrader||Financial Conduct Authority and ASIC||EURUSD:
|Forex, Indices, Stocks, Cryptocurrencies, and Commodities.||MT4, Web Trader, and Mobile App||Credit Cards, and Bank Transfer|
|eToro||Financial Conduct Authority, CySEC, ASIC||EURUSD:
|Forex, Indices, Stocks, Cryptocurrencies, Commodities, and ETFs.||Mobile App||Credit Cards, PayPal, and Bank Transfer|
|SpreadEx||Financial Conduct Authority||EURUSD:
|Forex, Indices, Stocks, Cryptocurrencies, Commodities, and ETFs.||Web Trader, and Mobile App||Credit Cards, and Bank Transfer|
|Admiral Markets||Financial Conduct Authority, CySEC||EURUSD:
|Forex, Indices, Stocks, Cryptocurrencies, Commodities, and ETFs.||MT4, MT5, Web Trader, and Mobile App.||Credit Cards, and Bank Transfer|
Concluding our guide, both the Nasdaq and the Dow represent an index or an average of various great numbers derived from the price movements of different stocks. And, this quickly enabled you to understand the Nasdaq CFD explained above. Similarly, we’ve discussed a practical example of Dow Jones CFD trading traded with DJIA. The DJIA generally comprises of companies found on the New York Stock Exchange, with only a couple of Nasdaq-listed stocks such as Intel (INTC), Apple (AAPL), Cisco (CSCO), and Microsoft (MSFT).