If you are interested in tech and biotech stocks, Tech100 is a popular index among other you can look at. Tech100, also known as Nasdaq 100 or USA tech 100, is an index that tracks the performance of the top 100 tech and biotech companies in the United States listed on the Nasdaq. This index comprises several top-notch companies in the United States such as Apple Inc., Microsoft Inc., Alphabet, Tesla, Amazon, Facebook, to mention a few. It is a significant index as it goes a long way to show the performance of the U.S. economy (together with the Standard & Poor’s 500 and the Dow Jones Industrial Average).
How does the Tech 100 Differ from Nasdaq Composite?
Unlike the Nasdaq 100 that tracks the performance of the top 100 tech stocks listed on the Nasdaq, the Nasdaq composite includes all stocks available on the Nasdaq stock market, which comprises about 3,000 stocks. While there are other stock market indexes in the United States and globally, the three most followed indexes include the Nasdaq composite, S&P 500 index, and the Dow Jones Industrial Average.
The Nasdaq composite is weighted heavily on technology stocks, with the Nasdaq 100 only a subset. Tech100 accounts for more than 90% of the Nasdaq composite flow. Although the Nasdaq 100 comprises stocks from the top non-financial companies, it includes 102 equities. Both Nasdaq composite and tech 100 are modified market cap-weighted. Being market-cap-weighted implies that the greater its market capitalization, the greater its effect on its index. Even though it is market capitalization-weighted, some rules limit the impact of the largest enterprises. This modified market capitalization-weighted index helps to ensure this, and it also gives room for more diversification.
A Brief History of the Nasdaq 100
To promote itself like the New York Stock Exchange (NYSE) in 1985, Nasdaq formed two indexes, the Nasdaq tech 100 and the Nasdaq financial 100. The Nasdaq 100 or tech 100 comprises stocks from industries like technology, industrial, biotech, telecom, retail, transport, healthcare, service, media, etc. While the Nasdaq financial 100 consists of stocks from mortgage firms, insurance companies, brokerage agencies, and banking firms.
At the time of its setup, the tech 100 had a base index of 250. However, it closed at 800 in 1993. The index was then reset at 125. This made the tech 100 prices fall below the price of the Nasdaq composite.
The Nasdaq 100 does not consist entirely of stocks for companies incorporated in the United States. Nine of the companies are incorporated outside the United States. In contrast to the S&P 500 index and Dow Jones. Standard and Poor’s also includes non-U.S. companies, but Dow Jones does not.
Comparison of Tech 100 and Other Major U.S. Indexes
Like the S&P 500 index and Dow Jones, tech 100 is an essential index in the United States. However, there are a few differences between this index and others.
While tech 100 and S&P 500 index are market cap-weighted, the Dow Jones is weighted on the stock price.
As pointed out earlier, tech 100 tracks the stock of top 100 tech companies in the United States listed on the Nasdaq; the S&P 500 index monitors the stock of top 500 U.S. companies listed on the New York Stock Exchange (NYSE) and the Nasdaq.
On the other hand, Dow Jones tracks the stock of the top 30 companies listed on the stock exchanges. Being price-weighted, the more the company’s stock price, the greater its effect on the Dow Jones Industrial Average.
How to trade CFDs on Tech 100 Index
The first step in trading on any stock index is to identify the right stockbroker. With so many brokers out there, it might be challenging to choose the right one. However, you need to pay close attention to the broker’s services before you select the service.
CAPEX.com offers some of the best brokerage services to make trading more efficient. To get started, you have first to sign up or create an account with the platform. Once you create an account, you will be given a demo account and a real (live) account.
The demo account allows you to trade without using your real money. You can also apply any strategy that could work on a real account on a demo account. This will enable you to test out your systems and be sure that they are viable before applying them to your real trades.
Furthermore, CAPEX.com also provides several tools and trading platforms to facilitate your experience while trading. The two trading platforms available are CAPEX WebTrader and MetaTrader 5 (MT5). When you sign up with CAPEX, you will be able to trade on a fully-customizable platform that comes with many features and tools such as tradable instruments and analytical tools, to mention a few. The platform includes other features such as a user-friendly interface, risk management tools, sophisticated analysis tools, negative balance protection, advanced charts, etc.
Trading on CAPEX.com allows you to make the most of the rich and extensive features the platform affords, with over 2100 CFD instruments for trading on the global market. You can trade CFDs on the U.S. tech 100 index from the platform, learn from experts and educate yourself from experts. Again, you can trade on other indexes such as the S & P 500 index, Dow Jones Industrial Average, etc.
Before going on with the trade, it is advisable to familiarize yourself with the market index basics, understand what it connotes, and how to trade. However, CAPEX.com’s features will make the trade comfortable, limiting additional risks while helping you get the required return on your investment with ease.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.