One exchange, several indices
The Nasdaq is first of all a US stock exchange, fully electronic, created in 1971. Many large technology companies are listed on it. The name also refers to indices: figures that summarise how a group of shares is moving.
- The Nasdaq Composite brings together more than 3,000 shares listed on this exchange. It started at 100 points on 5 February 1971.
- The Nasdaq 100 (ticker NDX) brings together 100 of the largest non-financial companies listed on the Nasdaq: banks and insurers are excluded.
You cannot buy an index directly. You gain exposure through a product that copies it, the best known being QQQ, a listed fund (ETF) that tracks the Nasdaq 100. The ETF guide explains this type of product.
How the Nasdaq 100 is calculated
A company’s market capitalisation is its share price multiplied by its number of shares. The index adds up the capitalisations of its companies, then divides that total by a number set by Nasdaq, the divisor. The divisor keeps the index comparable over time: when a company joins or leaves, it is adjusted so that this change does not, on its own, move the index. At its launch in 1985 the index was worth 250 points; its value was halved at the start of 1994.
The result: the bigger a company, the more weight it carries in the index. To limit concentration, Nasdaq uses a “modified” capitalisation with caps. According to the official methodology, at the December review, if a company exceeds 24%, the weights are adjusted so that none exceeds 20%; and if the companies weighing more than 4.5% together reach 48%, their total weight is brought down to 40%. The list of 100 companies is reviewed every year in December, and the weights are rebalanced in March, June and September.
Fictitious example: an index of three companies
- A is worth 600 billion dollars, B 300 billion, C 100 billion: their weights are 60%, 30% and 10%.
- If only A rises by 10%, the index rises by about 10% × 60% = 6%.
- If only C rises by 10%, the index rises by only about 1%.
That is why you look first at what the largest companies in the index are doing.
How to read the Nasdaq
- In percentages, not points: 200 points weigh half as much at 20,000 as at 10,000.
- Through the big companies: their quarterly results often move the whole index.
- Through interest rates and the US economy: inflation (CPI, the consumer price index), employment (NFP, the monthly US jobs report) and Federal Reserve decisions can cause sharp moves.
- In dollars: an investor in euros also gains or loses depending on the euro-dollar exchange rate.
Trading hours
The regular session runs from 9:30 am to 4 pm in New York, i.e. from 3:30 pm to 10 pm Paris time, and from 2:30 pm to 9 pm during the few weeks in March and October–November when the European and US clock changes are out of step. The market is closed at weekends and on US public holidays. To move on to practice, read how to trade the Nasdaq 100.
Sources: official Nasdaq-100 methodology, Nasdaq: what is the Nasdaq-100, Nasdaq Composite history (FRED). The BULLSAGE Academy offers a “Bull Nasdaq” specialisation with exercises and quizzes.
Get the trading plan kit (PDF)
The plan to fill in, the eight questions to ask before acting, the position size calculation and a journal template. You will also be told when the platform opens, on 1 January 2027.