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Nasdaq 100 E-mini Futures Trading Strategies Analysis | Symbols and Contract Specifications

Last Updated on 10 February, 2024 by Trading System

The Nasdaq 100 futures are among the most highly traded contracts in the equity index sector of the futures market. As a result of its lower cost of trade and high daily trading volume, the E-mini Nasdaq 100 futures are the most popular among Nasdaq futures traders.

While traders speculate on the direction of the Nasdaq 100 Index, investors also trade the futures contracts to gain exposure to the stocks included in the index without having to own the stocks themselves.

Nasdaq 100 E-mini Futures Contract Specifications

Nasdaq 100 E-mini Futures Contract Specifications

Nasdaq 100 E-mini Futures Contract Specifications
  1. Symbol: NQ
  2. Trading Hours: Sunday to Friday 6:00 p.m. – 5:00 p.m. (ET)
  3. Contract Size: $20 x Index Value
  4. Price Quotation: Index Points
  5. Tick Size: 0.25 Index Points
  6. Daily Price Limit: 10%
  7. Delivery Month: March, June, September, December
  8. Last Trading Day: 2nd Friday of Delivery Month
  9. Position Limits: Subject to CFTC regulation
  10. Price Settlement: Cash settled based on the official settlement value of the Nasdaq 100 Index
  11. Minimum Fluctuation: 0.25 Index Points
  12. Margin Requirements: Determined by individual broker
  13. Trading Platform: Globex (CME Group)
  14. Currency: US dollars
  15. Product Code: CME Globex: NQ
  16. Description: The Nasdaq 100 E-mini Futures Contract is a cash-settled futures contract based on the Nasdaq 100 Index.

Trading Strategies

 

Nasdaq E-mini Futures Trading Strategies

The Nasdaq e-mini futures market is the perfect choice when it comes to building strategies ranging from daytrading systems, to swing trading strategies. There are a lot of edges that are unique to the market, and combined with the high liquidity of the market, there are many trading opportunities to explore.

If you’re interested in learning how to build trading strategies, do have a look at our guide to building trading strategies. Those of you who are interested in getting edges for a variety of markets, including Nasdaq futures, might want to have a look at our edge membership!

The Nasdaq 100 E-mini futures contract is a popular instrument amongst traders, offering investors a cost-effective way to gain exposure to the largest US technology stocks. It is important to note that this futures contract is quite volatile due to its high exposure to tech stocks, which are known for exhibiting rapid price movements. As such, it is important for traders to develop strategies that can help them capitalize on these price movements.

One strategy that traders can use is to take advantage of the intraday price action in the Nasdaq 100 E-mini futures contract. Traders can look for opportunities to enter and exit the market on a short-term basis, by looking for breakouts and pullbacks in the price action. Traders can also look for support and resistance levels within the chart, which can help to identify potential entry and exit points.

Another trading strategy that is often used when trading the Nasdaq 100 E-mini futures is to use trend following to identify potential trading opportunities. Traders can use trend lines, moving averages, and other technical indicators to monitor the overall trend of the market and identify potential trading opportunities. In addition, traders can also look for reversals in the trend to capitalize on short-term price movements.

Finally, traders can also employ strategies such as momentum trading to capitalize on rapid price movements in the Nasdaq 100 E-mini futures. Momentum traders look for rapid price movements in either direction and look to capitalize on them by entering and exiting positions quickly. This can be a lucrative strategy if used correctly, as it can help traders capitalize on short-term price movements in the market.

In conclusion, traders have many options when it comes to trading the Nasdaq 100 E-mini futures contract. Traders should develop a strategy that fits their risk tolerance and trading style in order to maximize their chances of success. By utilizing intraday, trend-following, and momentum trading strategies, traders can look to capitalize on the rapid price movements of the Nasdaq 100 E-mini futures contract.

Nasdaq 100 Index Futures Seasonality

NASDAQ 100 Futures (ND) Seasonal Chart

Nasdaq 100 E-mini Futures seasonality

The Nasdaq 100 E-mini Futures is a futures market that tracks the underlying Nasdaq 100 Index. It is a popular product for many traders, as the index is comprised of the top 100 non-financial companies listed on the NASDAQ exchange, including Apple, Microsoft, and Amazon. As such, the Nasdaq 100 E-mini Futures is a good way to gain exposure to the performance of these companies and the markets in general.

Seasonality is an important factor to consider when trading the Nasdaq 100 E-mini Futures. Seasonal patterns are often seen in the markets, and understanding these patterns can help traders make better decisions. Here, we will discuss the seasonality of the Nasdaq 100 E-mini Futures, looking at different months and how they tend to perform.

January

January is typically a strong month for the Nasdaq 100 E-mini Futures. This is due in part to the start of the year and the increased optimism that usually comes with it. This optimism often translates into an increase in buying, which can help to drive the markets higher. January is also the month that many companies release their quarterly earnings, which can also have a positive impact on the markets.

February

February is usually a mixed month for the Nasdaq 100 E-mini Futures. On the one hand, the initial optimism from the start of the year has often faded by this point and the markets tend to be more subdued. On the other hand, the release of the quarterly earnings from the previous quarter can still have a positive effect on the markets, depending on the results.

March

March is typically a good month for the Nasdaq 100 E-mini Futures. The start of the quarter is often seen as a time of optimism, and this can help to drive the markets higher. There is also the end of the first quarter of the year, which often brings with it increased buying as investors look to take advantage of any potential gains.

April

April is usually a quiet month for the Nasdaq 100 E-mini Futures. This is due to the fact that many investors and traders are waiting for the start of the earnings season in May. As such, the markets tend to be range-bound during this period, as there is often not much news to move them in either direction.

May

May is usually a strong month for the Nasdaq 100 E-mini Futures. This is due to the start of the earnings season, which often brings with it increased buying as investors look to take advantage of any potential gains. Additionally, the increased optimism from the start of the quarter can also help to drive the markets higher.

June

June is typically a quiet month for the Nasdaq 100 E-mini Futures. This is due to the fact that many investors and traders are waiting for the start of the summer months, which are typically seen as a time of increased volatility. As such, the markets tend to be range-bound during this period, as there is often not much news to move them in either direction.

July

July is usually a good month for the Nasdaq 100 E-mini Futures. This is due to the start of the summer months, which often bring with it increased buying as investors look to take advantage of any potential gains. Additionally, the increased optimism from the start of the quarter can also help to drive the markets higher.

August

August is typically a mixed month for the Nasdaq 100 E-mini Futures. On the one hand, the start of the summer months can often bring with it increased volatility. On the other hand, the end of the quarter is often seen as a time of optimism, and this can help to drive the markets higher.

September

September is usually a quiet month for the Nasdaq 100 E-mini Futures. This is due to the fact that many investors and traders are waiting for the start of the fourth quarter, which is typically seen as a time of increased optimism. As such, the markets tend to be range-bound during this period, as there is often not much news to move them in either direction.

October

October is typically a good month for the Nasdaq 100 E-mini Futures. This is due to the start of the fourth quarter, which often brings with it increased buying as investors look to take advantage of any potential gains. Additionally, the increased optimism from the start of the quarter can also help to drive the markets higher.

November

November is usually a mixed month for the Nasdaq 100 E-mini Futures. On the one hand, the start of the fourth quarter can often bring with it increased volatility. On the other hand, the end of the year is often seen as a time of optimism, and this can help to drive the markets higher.

December

December is typically a quiet month for the Nasdaq 100 E-mini Futures. This is due to the fact that many investors and traders are waiting for the start of the new year, which is typically seen as a time of increased optimism. As such, the markets tend to be range-bound during this period, as there is often not much news to move them in either direction.

Overall, the Nasdaq 100 E-mini Futures exhibits seasonal patterns that can be used to inform trading decisions. Knowing which months tend to be more volatile or more subdued can help traders plan their strategies and position themselves to take advantage of any potential gains.

What important report days are there for Nasdaq 100 E-mini Futures? 

Nasdaq 100 E-mini Futures are a popular financial instrument for traders, investors, and speculators alike. As such, there are several important report days associated with this futures contract. What important report days are there for Nasdaq 100 E-mini Futures? that moves the market?

First, the Nasdaq 100 E-mini Futures contract is subject to a quarterly expiration cycle. On the last trading day of the March, June, September, and December quarterly expirations, the market will close at 1:30 PM Eastern Standard Time. This is known as the “Quarterly Expiration Day” and is important because it marks the last day that traders can take delivery on the contract.

Second, the Nasdaq 100 E-mini Futures contract is subject to a quarterly rollover period. This occurs on the second to last trading day of the March, June, September, and December quarterly expirations. During the rollover period, open positions will be automatically rolled forward to the next contract month. This is an important report day because it marks the beginning of the next quarterly expiration cycle.

Third, the Nasdaq 100 E-mini Futures contract is subject to a monthly expiration cycle. On the third Friday of each month, the futures contract will expire at the close of trading. This is known as the “Monthly Expiration Day” and is important because it marks the last day that traders can take delivery on the contract.

Fourth, the Nasdaq 100 E-mini Futures contract is subject to a monthly rollover period. This occurs on the second to last trading day of each month. During the rollover period, open positions will be automatically rolled forward to the next contract month. This is an important report day because it marks the beginning of the next monthly expiration cycle.

Trading Strategies

Finally, the Nasdaq 100 E-mini Futures contract is subject to a quarterly re-evaluation period. This occurs on the third Thursday of the March, June, September, and December quarterly expirations. During the re-evaluation period, open positions will be re-evaluated based on the current market conditions. This is an important report day because it marks the end of the current quarterly expiration cycle.

In summary, there are five important report days associated with the Nasdaq 100 E-mini Futures contract: the quarterly expiration day, the quarterly rollover day, the monthly expiration day, the monthly rollover day, and the quarterly re-evaluation day. Traders should be aware of these important report days in order to properly manage their positions and stay up-to-date on the latest market conditions.

What is the Nasdaq 100 Index?

Nasdaq Futures
Nasdaq E-mini Futures

The Nasdaq 100 Index is a stock market index that measures the performance of 100 of the largest, non-financial, and most highly traded companies listed on the Nasdaq stock exchange. Large companies from the technology, healthcare, biotech, retail, and industrial sectors are included in the index.

Tech stocks make up more than half of the index’s weight. Stocks from the retail sector, such as Amazon and travel services, make up about 25 percent of the weight. Biotech, healthcare, and industrial sector complete the index.

A modified market-capitalization weighting system is used in calculating the index. So, even though the component stocks are weighted according to their market cap, some distribution rules are in place to limit the influence of the largest companies, thereby balancing the index with all members.

The Nasdaq 100 Index was first calculated by the NASDAQ on January 31, 1985, and has been maintained by the exchange since then.

What is Nasdaq 100 E-mini futures?

Nasdaq futures are equity index futures in which the underlying asset is the Nasdaq 100 Index. The ‘E’ stands for electronically traded, while the ‘mini’ stands for a fraction of the standard contract. Thus, the E-mini Nasdaq 100 futures are electronically traded Nasdaq futures whose values are one-fifth of the standard contract. Futures are standardized, tradable contracts to receive or deliver the specified value of the underlying index on a future date, at an already agreed price.

Created in the 1990s, the E-mini Nasdaq 100 futures were introduced to offer small traders an alternative to the standard contract as the Nasdaq 100 Index rose dramatically during the dotcom bubble of the late 1990s. The trading volume of the E-mini Nasdaq 100 futures has since surpassed that of the standard contracts.

Futures are leveraged instruments, so a trader only needs a fraction of the total worth of the contract, known as the margin, to be able to trade the contract. Daily trading outcomes are marked to market, which means that at the end of every trading day, the clearinghouse of the exchange credit/debit the traders’ accounts with the profits or losses made on that day. Traders whose accounts are falling below the maintenance margin are required to top up their accounts to be able to keep their contracts.

Why trade Nasdaq 100 E-mini futures

Why Trade Nasdaq Futures?
Why Trade Nasdaq Futures?

There are many reasons to trade the E-mini Nasdaq 100 futures, such as the following:

Speculation: The majority of the traders in the equity index futures market are speculators, and the E-mini Nasdaq 100 futures have adequate liquidity and volatility which attracts speculative traders.

Hedging: Investors can use the E-mini Nasdaq 100 futures to hedge their exposure in technology stock since it has a heavy concentration of tech stocks.

Portfolio diversification: Diversification helps investors to reduce risk. Some investors use the E-mini Nasdaq 100 futures to invest in several tech stocks and non-tech stocks without owning any of those stocks.

How does the Nasdaq 100 E-mini futures trade?

The E-mini Nasdaq 100 futures are offered on the Chicago Mercantile Exchange (CME) Group to exclusively trade on the CME Globex electronic trading platforms. The market is open Sunday to Friday, from 6:00 p.m. to 5:00 p.m. Eastern Time (ET) the next day, except on Fridays when the market closes by 5:00 p.m. ET to reopen by 6:00 p.m. on Sunday. BTIC trading is available Sunday to Friday from 6:00 p.m. to 4:00 p.m. ET the next day.

A contract unit of E-mini Nasdaq 100 futures (NQ) is equivalent to $20 times the current value of the Nasdaq 100 Index. The minimum price fluctuation is as follows:

  • Outright: 0.25 index points, which is equivalent to $5.00 per contract
  • Calendar Spread: 0.05 index points or $1.00 per contract
  • BTIC (with the code NQT): 0.05 index points or $1.00 per contract

There are contracts listed for five months in the March Quarterly Cycle (March, June, September, and December). The maintenance margin requirement is $7,500, which is a little over 4 percent of the total worth of the contract.

At expiration, the contract is settled with cash. The last trading day is the third Friday of the contract month, and trading terminates at 9:30 a.m. ET. For the BTIC, trading terminates on the Thursday before the third Friday of the contract month at 4:00 p.m. ET.

How to start trading E-mini Nasdaq 100 futures

If you wish to start trading E-mini Nasdaq 100 futures, all you need is to create an account with the exchange through a futures broker and deposit the required margin. You don’t need to have the full dollar worth of the contract. However, be cautious about futures trading — while it can easily make you money, you can also lose more than you invested.

The factors that affect Nasdaq 100 E-mini futures

Many factors affect stock prices. Here are some of the factors that can affect the Micro E-mini Nasdaq 100 futures:

Trade wars: Whenever there’s news about trade wars, stock prices tend to rise and so too does the Nasdaq 100 Index and the e-mini futures contracts.

Political events: Elections, referendums, wars, and other forms of geopolitical events affect stock prices and, in turn, move the index.

Changes in interest rates: The stock market usually responds to changes in interest rates.

Value of the U.S. dollars: A falling USD often drives up stock prices, while a rising USD can lead to a decline in stock prices. Changes in the prices of the Nasdaq 100 Index’s component stocks do affect the index.

Nasdaq 100 E-mini Futures Trading Strategies cot report

The Commodity Futures Trading Commission (CFTC) Commitments of Traders (COT) report is a weekly report released every Friday at 3:30 p.m. Eastern time. The report shows the total number of contracts held by commercial and non-commercial traders, as well as the number of contracts held by each category of trader. This report can be a valuable tool for traders as it provides insight into the positioning of large market participants and can help traders identify potential trading opportunities and develop trading strategies.

For example, if the COT report shows that large commercial traders have a large long position in a particular futures contract, this could be an indication that prices in the underlying asset are likely to move higher. On the other hand, if large commercial traders hold a large short position, this could be an indication that prices are likely to move lower.

Trading Strategies

Additionally, the COT report can also be used to identify potential trading opportunities in the opposite direction. If the COT report shows that large commercial traders are heavily positioned in one direction, this could be an indication that the market is overbought/oversold and that a reversal may be imminent.

In summary, the COT report can be a valuable tool for traders looking to develop Nasdaq 100 E-mini futures trading strategies. By analyzing the positions held by large commercial and non-commercial traders, traders can gain insight into the direction of the market, identify potential trading opportunities, and develop strategies to take advantage of them.

FAQ

Why trade Nasdaq 100 E-mini futures?

There are several reasons to trade Nasdaq 100 E-mini futures, including speculation, hedging against exposure to technology stocks, and portfolio diversification.

What factors affect Nasdaq 100 E-mini futures prices?

Various factors impact Nasdaq 100 E-mini futures prices, including trade wars, political events, changes in interest rates, and fluctuations in the value of the U.S. dollar.

How can I start trading Nasdaq 100 E-mini futures?

To start trading Nasdaq 100 E-mini futures, you need to open an account with a futures broker, deposit the required margin, and familiarize yourself with the trading platform and risk management strategies.

How does leverage work in Nasdaq 100 E-mini futures trading?

Nasdaq 100 E-mini futures are leveraged instruments, meaning traders only need to deposit a fraction of the total contract value as margin to trade. However, leverage amplifies both profits and losses, so traders should exercise caution.

 

Conclusion

The Nasdaq 100 futures offers investors a way to hedge their exposure in tech stocks. It also provides traders an opportunity to speculate on the direction of the Nasdaq 100 Index. The contract is traded on the CME’s Globex electronic trading platform.

Here is our archive with articles about other tradeable futures markets.

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