Why NAS100 is a Go-To Instrument for Prop Traders
- Ankit Gupta
- August 1, 2025
Introduction:
The NAS100 or Nasdaq100 is an Equity Index of the largest 100 non-financial companies. It’s a barometer of the US economy and represents the health of IT companies. NAS100 was formed on 31st January 1985 and shot to fame during the dot-com revolution. To assess the Financial Firms, there is a Nasdaq Financial-100. This index has seen the rise of the US as a superpower in the world, the 2000 IT recession, the Housing Bubble, the 9/11 attack and subsequent wars in the Middle East, Russia/Ukraine conflicts, and the change of US presidents.
Most of the Prop Trading Firms have an Instrument to trade for NAS100. It’s a popular instrument to trade. There are a lot of reasons and key points that a Prop Trader should look at while trading this index. Let’s delve deep and see the things you have to take care of while trading NAS100:
Factors that Impact NAS100:
1. Impact of Economic Events:
The index’s performance is a lot impacted by the economic events. Since it’s a composite of firms from technology, manufacturing, infrastructure companies, etc, any news or an event that has a significant bearing on the performance of the business cycle will impact the listed prices and in turn the Index numbers.
2. US Dollar Performance:
US companies get most impacted by a strong dollar rate and, in turn, move the share prices upwards. There has been great focus on the dollar rate recently to help it further improve its global benchmarking as the most preferred currency for trading.
3. Fed Interest Rates:
Federal interest rates have had an impact on the consumption cycle of the economy, which leads the way to the lending and borrowing outcome for banks and the balance sheets of companies. Hence, a low interest rate regime shall help the companies borrow at lower rates and manage their profit margins. This paves the way for the stock price impact and moves the index significantly.
4. Companies’ Financial Performance:
There is a direct correlation between the company’s performance and its stock price. Traders need to keep a close eye on the companies’ financial performance that are a part of the NAS100 Index. A way to track the performance is by keeping an eye on the economic calendar that impacts the prices.
5. Diversification and Hedging Options:
Many skilled funded traders use the NAS100 to diversify the portfolio and, at times, use it as a hedge option to prevent the equity level in case the market is volatile. Being an index, it is built of different sectors and goes through the ups and downs of business cycles, hence insulating against the market price movements. This is a prime reason why the NAS100 is a popular index with traders who prefer index trading.
6. Track changes in the NAS100 Structure:
As a practice, keep track of any changes in the companies that are part of the NAS100 Index. This shall help to analyse the price levels and tracking of the events that shall impact the profitability of firms. This will be another key decision point at what levels to enter into a contract or plan for an exit.
Why Traders Prefer NAS100:
1. High Liquidity:
As you have learned, NAS100 covers the top 100 non-financial companies listed on Nasdaq; thus, the overall trade volume of the index remains high. It has companies like Google, Apple, Microsoft, and other tech stocks, making it more liquid, allowing traders to enter and exit trades without worrying much about the slippage.
2. Volatility:
The NAS100 is an index known for its high volatility, and volatility creates opportunities to earn profit for the traders. The good thing is that it has a historic trend of price shifts for both intraday traders and swing traders. The major reason behind this is the stocks or companies in the NAS100 are tech-heavy, and with each new innovation or trend, the price of the index fluctuates.
3. Correlation with Tech:
The index has over 60% tech companies, making it a favorable choice for traders who follow the tech industry and still want some diversity. If you are someone who closely follows the tech industry, NAS100 can be your asset to keep an eye on.
4. Availability:
The NAS100 is available in different formats, such as CFDs and futures. So, irrespective of whether you trade CFDs or futures, you can choose NAS100. This allows traders to pick the format that sits well with their trading strategy, risk tolerance, experience, and more.
5. Global Popularity:
Another reason why traders prefer to trade NAS100 is its global popularity. It is known in almost all parts of the world and is not limited to just individual investors. Many institutional investors also take a keen interest in the index, making it more reliable and reflecting its secure future.
Conclusions:
NAS100 is a globally recognized performance index for non-financial firms. This index is a benchmark for many other index performances. The point is that any company needs to pass through very selective criteria to be a part of the NAS100 to ensure the quality of the outcome. The index number is a very true and fair assessment of the business conditions. It’s a moment of pride for any firm to be listed in this index. To trade effectively in the long term, it’s essential to continuously learn about these firms’ business models and assess their future prospects.
FAQs: Why NAS100 is a Go-To Instrument for Prop Trading Firms
1. What exactly is the NAS100 Index?
NAS100 is an index fund that covers the largest 100 non-financial companies listed on NASDAQ. Over 60% of the companies in the index are related to tech, including Apple, Microsoft, Amazon, and Google.
2. Why do prop traders prefer NAS100?
The major reason why NAS100 is preferred among Prop trading firms and traders is that it offers high liquidity, strong volatility, and global popularity. These factors create opportunities for traders to enter and exit positions quickly, capitalize on price movements, and diversify their portfolios.
3. What impacts the price of NAS100?
There are a lot of factors that impact NAS100, such as the US dollar price, performance of companies, major tech innovations, global economy, and more.
4. Can beginners trade NAS100?
Yes, it can be traded by both beginner and experienced traders. As long as you have knowledge of basic trading and you can read charts, you can trade NAS100. If you are interested in trading indices, NAS100 should be in your list.
5. Can NAS100 be traded outside the US market hours?
Yes, NAS100 CFDs and futures can be traded almost around the clock through brokers and prop trading firms. This extended access is one reason why it’s a favorite among global traders.
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