NAS100: How to Use It in Your Portfolio

The NAS100, also known as the Nasdaq 100 index, is a favourite among traders and investors seeking exposure to the world's most innovative and fastest-growing companies.

Comprising 100 of the largest non-financial firms listed on the Nasdaq Stock Exchange, the NAS100 is synonymous with technology leadership, growth potential, and market dynamism. 

This article explores how traders can effectively use NAS100 in their portfolios, the benefits and risks involved, and how EBC's trading products offering can enhance your trading experience.

What Is the NAS100?

The NAS100 tracks the performance of the 100 largest non-financial companies on the Nasdaq, including giants like Apple, Microsoft, Nvidia, Amazon, and Alphabet. The index is heavily weighted towards technology, but also includes consumer discretionary, healthcare, and industrial leaders. Its composition makes it a barometer for the global tech sector and a key driver of US equity market performance.

Key Features of the NAS100

• Tech-Heavy Exposure: Over 50% of the index is allocated to technology stocks.

  
  

• Growth Focus: Companies are selected for their size, liquidity, and growth prospects.

  
  

• Global Impact: Many NAS100 constituents are multinational firms with worldwide influence.

  
  

• High Liquidity: The index and its derivatives are among the most traded in the world.

Why Include NAS100 in Your Portfolio?

1. Access to Market Leaders

Investing in the NAS100 gives you exposure to some of the most successful and innovative companies globally. These firms often set trends in technology, consumer behaviour, and business models, providing strong growth potential.

2. Diversification Benefits

While the NAS100 is tech-heavy, it still offers diversification across multiple sectors, including healthcare, consumer services, and industrials. This helps reduce single-stock risk and smooths portfolio returns over time.

3. Strong Historical Performance

The NAS100 has consistently outperformed many other major indices over the past decade, delivering annualised returns of around 18%. Its focus on high-growth companies has made it a preferred choice for traders seeking capital appreciation.

4. Liquidity and Flexibility

With high trading volumes and tight spreads, NAS100-based products (such as ETFs and CFDs) offer excellent liquidity. This makes it easy to enter and exit positions, implement short-term strategies, or adjust your portfolio as market conditions change.

How to Use NAS100 in Your Portfolio

1. Core Growth Allocation

Many traders use the NAS100 as a core holding to drive portfolio growth. Allocating a portion of your equity exposure to the index can help capture the upside of the technology and innovation sectors.

Example Allocation:

• 30–50% of the equity portion in a growth-oriented portfolio

2. Tactical Trading and Short-Term Opportunities

The NAS100's volatility and responsiveness to news make it ideal for tactical trading. Traders can use technical analysis, momentum strategies, or event-driven trades to capitalise on short-term price movements.

Popular Approaches:

• Day trading and swing trading using NAS100 CFDs or ETFs

  
  

• Trading around earnings seasons for major index constituents

  
  

• Using stop-loss and take-profit orders to manage risk

3. Diversification with Other Indices

Pairing the NAS100 with other indices, such as the S&P 500 or Dow Jones, can balance your portfolio. While the NAS100 offers growth, other indices may provide more stability or value exposure.

4. Hedging and Risk Management

The NAS100 can also be used as a hedging tool. If you hold a portfolio of tech stocks, shorting the NAS100 (via CFDs or options) can help offset potential losses during market downturns.

Hedging Example:

• If you are long on several tech stocks, taking a short position in NAS100 CFDs can reduce your overall portfolio risk during periods of tech sector weakness.

5. Thematic and Sector Rotation Strategies

Traders can use the NAS100 to implement sector rotation strategies, increasing exposure when technology and growth sectors are in favour, and reducing it when defensive sectors outperform.

Strategy Tips:

• Monitor macroeconomic trends, interest rates, and earnings reports to anticipate sector shifts.

  
  

• Use technical indicators (like moving averages and RSI) to time entries and exits.

Risks to Consider When Trading NAS100

• Concentration Risk: The index is heavily weighted towards a few mega-cap tech stocks, which can lead to higher volatility.

  
  

• Market Cycles: Growth stocks may underperform during periods of rising interest rates or economic uncertainty.

  
  

• Currency Exposure: For non-USD investors, currency fluctuations can impact returns.

  
  

• Event Risk: Earnings surprises, regulatory changes, or geopolitical events can cause sharp price movements.

Practical Tips for Trading NAS100

• Stay Informed: Follow news and earnings reports for major index constituents.

  
  

• Use Stop-Loss Orders: Protect your capital from unexpected market moves.

  
  

• Diversify: Don't rely solely on NAS100; combine it with other assets for balanced risk.

  
  

• Leverage Wisely: If trading CFDs, use leverage cautiously to avoid magnifying losses.

How to Access NAS100: ETFs, CFDs, and More

NAS100 ETFs

Exchange-traded funds (ETFs) tracking the NAS100, such as the Invesco QQQ Trust (QQQ), offer a simple way to gain exposure to the index. These ETFs are highly liquid, cost-effective, and suitable for both long-term investors and active traders.

NAS100 CFDs

Contracts for Difference (CFDs) allow traders to speculate on NAS100 price movements without owning the underlying assets. CFDs offer leverage, the ability to go long or short, and flexible position sizing, making them popular for short-term trading strategies.

Futures and Options

Advanced traders may use NAS100 futures and options for hedging, speculation, or income generation. These instruments require a deeper understanding of derivatives and risk management.

Why Trade NAS100 with EBC?

EBC offers a comprehensive suite of trading solutions for NAS100 enthusiasts:

• ETF CFDs: Trade NAS100 ETFs as CFDs, combining the benefits of ETF diversification with the flexibility of CFD trading.

  
  

• Advanced Trading Tools: Access real-time data, technical analysis tools, and fast execution.

  
  

• Leverage and Short Selling: Amplify your trading strategies with leverage and the ability to profit from both rising and falling markets.

  
  

• Competitive Spreads: Benefit from tight spreads and low trading costs.

  
  

• Global Access: Trade NAS100 and other major indices from anywhere, 24/5.

Whether you are a long-term investor or an active trader, EBC's platform provides the tools and flexibility needed to make the most of NAS100 opportunities.

Conclusion

The NAS100 is a powerful addition to any trader's portfolio, offering access to the world's leading growth companies, high liquidity, and a range of trading strategies. 

By understanding how to use NAS100—whether as a core holding, a tactical trading instrument, or a hedging tool—you can enhance your portfolio's growth potential and manage risk more effectively.

With EBC's ETF CFD offering and advanced trading features, you have everything you need to trade the NAS100 with confidence and efficiency.

Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.