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What Are E-Mini Nasdaq 100 Futures (NQ)?

Nasdaq NQ MNQ futures Nasdaq-100

The E-mini Nasdaq-100 (NQ) from the Chicago Mercantile Exchange (CME) Group is a financial futures instrument that enables active traders to speculate the future value of the Nasdaq-100 market index. More specifically, the NQ offers traders exposure to the 100 leading non-financial US large-cap companies traded on the Nasdaq stock exchange.

Founded in 1971, the Nasdaq is a diversified US-based equities exchange. Companies such as Google (GOOGL), Microsoft (MSFT), Amazon (AMZN), Netflix (NFLX), Tesla (TSLA), Apple (AAPL) and Facebook (FB) are all traded on the Nasdaq stock market. When traders think of the tech sector, Nasdaq comes to mind.

Nasdaq futures were first introduced in 1996 at the Chicago Mercantile Exchange (CME). Originally the contract value was 100 times the Nasdaq 100 index, but as the value of the Nasdaq 100 grew, fewer and fewer traders could participate. In 1999, the CME launched E-mini Nasdaq futures (NQ) at 20 times the value of the Nasdaq 100.

What Is the Nasdaq-100 Index?

The Nasdaq-100 is comprised of the leading 100 companies within the Nasdaq Composite Index, which includes nearly all stocks listed on the Nasdaq stock market. It is commonly referred to as a “tech-heavy index” since more than half of the companies on it are technology stocks.

Nasdaq futures from the CME Group are derived directly from the Nasdaq-100 index. The CME offers two contracts to speculate the Nasdaq-100:

  • E-mini Nasdaq Futures (NQ)
  • Micro E-mini Nasdaq Futures (MNQ)

Why Trade Nasdaq-100 Futures?

NQ futures offer investors both long and short opportunities to trade the Nasdaq 100 index in a much more cost-effective way than Nasdaq-based ETFs or baskets of stocks. Some traders use the NQ as a way to hedge their stock exposure, while others use this broad-based index futures instrument to find new growth opportunities.

NQ trades virtually 24-hours a day electronically and attracts participants from all over the world. Traders are drawn to the technology-focused Nasdaq market because of its remarkable performance and volatility over the past 10+ years.

Micro E-mini Nasdaq Futures (MNQ)

Launched in May 2019 by the CME Group, Micro E-mini Nasdaq-100 futures (MNQ) allow traders to participate in the US equity markets with a significantly reduced financial commitment. This micro-sized contract mimics the full-size E-mini Nasdaq-100 contract and the charts are nearly identical.

At 1/10th the size of standard E-mini Nasdaq futures, the MNQ is an ideal instrument for those who wish to gain exposure to the Nasdaq-100 index with less capital.

Additionally, MNQ is fully fungible with NQ, meaning traders can use both instruments in combination to fine-tune their positions.
MNQ futures offer investors both long and short opportunities to speculate the Nasdaq 100. Micro equity index futures allow traders to access American stock markets without a large financial burden or margin requirement. Some traders trade MNQ as a way to hedge exposure to other sectors, while others use this tech-heavy index futures instrument to find growth and diversification opportunities.

E-mini Nasdaq Futures Benefits

  • Trade the Tech Sector with Less Capital: With a significantly lower financial commitment required, Nasdaq futures offer a unique opportunity for technology speculators. Through NinjaTrader Brokerage, the account minimum is only $400 with $50 margins to start trading Micro E-mini Nasdaq futures.
  • Trade an Entire Sector with One Instrument: Rather than tracking individual stocks, Nasdaq futures traders speculate a cross-section of the tech sector. This simpler approach provides targeted diversification within a single asset class. Nasdaq futures traders track and trade one futures contract instead of analyzing multiple different stocks at once.
  • Leverage Your Capital: Nasdaq E-mini & Micro E-mini futures offer leverage, more than even the most highly leveraged Nasdaq-derived ETFs. Futures buying power enables you to control a large contract value with a relatively small amount of capital. Please note: increased leverage comes with increased risk.
  • Trade Highly-Liquid Markets: High liquidity is the norm in Nasdaq futures markets making it easier for traders to execute a trade quickly. In other words, focus on timing your entries & exits rather than wondering if there will be sufficient volume to trade.
  • Trade Both Sides of the Market with Ease: Futures traders can speculate the Nasdaq both on the long and short side with no uptick rule or short-selling restrictions. And since Micro E-mini Nasdaq futures are fully fungible with their E-mini counterparts at a 10:1 ratio, they present additional flexibility in position management. Fine-tune a position as market conditions change or offset a position to reduce risk using both NQ and MNQ futures.
  • Trade Around the Clock: Nasdaq futures traders can participate in the market nearly 24 hours a day, 6 days a week. This additional opportunity empowers futures traders to quickly react to pre & post-session events such as earnings releases and economic announcements, providing both convenience and peace of mind.

E-Mini Nasdaq 100 Futures Contract Specs:

  • Exchange: Chicago Mercantile Exchange (CME)
  • Class: Futures
  • Trading Symbol: NQ
  • Contract Size: $20 X Nasdaq 100 Index
  • Pricing Unit: U.S. Dollars
  • Tick Size: 0.25
  • Tick Value: $5
  • Point Value: 1 = $20
  • Average Daily Volume: 453,963 (As of December 2020)
  • Intraday Margin: $500
  • Contract Months: March, June, September & December
  • Trading Hours: Sunday to Friday 6:00 pm – 5:00 pm ET
  • Position Limit: 50 contracts

Key Economic Reports Which Can Impact Nasdaq Futures

Several economic reports are released each week which can trigger price moves in Nasdaq futures.

  • Nonfarm Payroll & Unemployment Report – Released the first Friday of each month by the US Bureau of Labor Statistics (BLS), this report includes how many jobs the US economy has added or lost in the previous month.
  • Earnings Releases – Published each quarter by Nasdaq 100 companies, earnings releases can initiate price moves in Nasdaq futures.
  • Federal Open Markets Committee (FOMC) Meetings – The FOMC meets eight times a year to discuss US monetary policy and interest rates. Equity markets tend to move upward after a rate cut and vice versa.
  • Consumer Price Index (CPI) – Released in the middle of each month by BLS, this report measures inflation and cost-of-living changes that can impact Nasdaq futures prices.

The chart above, created 100% FREE using the NinjaTrader platform, displays weekly E-mini Nasdaq futures price action since 2010. Nasdaq futures have gained more than 500% in value and have provided ample opportunities for traders of all timeframes.

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