Nasdaq 100 E-mini Trading Strategy (Backtest And Futures Example)
Last Updated on May 27, 2023
The Nasdaq E-mini 100 futures contract is an electronically traded stock market index futures contract based on the Nasdaq 100 index — an index of the largest 100 non-financial companies listed on the Nasdaq stock exchange. The index is primarily made up of technology stocks and can be viewed as a barometer for the US tech industry. If you want to trade this contract, you must have a strategy. What is the Nasdaq 100 E-mini futures strategy?
A Nasdaq 100 E-mini futures strategy involves the techniques used to trade the Nasdaq futures, which usually involves the use of fundamental and technical analysis for timing the market. Nasdaq 100 E-mini futures are derivative security that gives a trader the obligation to buy or sell a specified amount of the Nasdaq 100 index on a future date and at a pre-agreed price. On the CME Globes platform, you can trade the contract, either to hedge your exposure in the equity market or for speculation purposes.
In this post, we will answer some questions regarding the Nasdaq 100 E-mini futures trading strategy. We’ll also make a backtest of a strategy to help you get som trading ideas.
What are Nasdaq 100 E-mini futures?
Nasdaq 100 E-mini futures are derivative products that allow an investor or trader to hedge or speculate on the Nasdaq 100 index’s future price. It is a contract to buy or sell a specified amount of the Nasdaq100 index at a specified price on a future date. It debuted on June 21, 1999, and has since become a standard for tracking the growth of the technology sector.
The E-mini Nasdaq futures contract is one-fifth the size of the full Nasdaq futures contract, and both are traded electronically on the Chicago Mercantile Exchange (CME) and expire quarterly in March, June, September, and December. It enables traders to profit from short-term price fluctuations in the index.
What is a Nasdaq 100 E-mini futures strategy?
A Nasdaq 100 E-mini futures strategy involves the techniques used to profit from the market. Speculators can take advantage of the price movement by using technical indicators and fundamental analysis to time their entry in the market. It also involves proper risk management and position size strategy to increase winning probability.
In other to trade the futures profitably, you need to have a proven trading strategy. Your strategy must include accurate entry and exit points, proper risk management, and great market psychology. Your strategy may include hedging, and speculating but is not limited to spread betting and arbitrage.
Nasdaq 100 E-mini futures strategy backtest
A backtest with strict trading rules, settings, statistics, and historical performance is coming soon.
What is the seasonality of Nasdaq 100 E-mini futures?
Seasonality is a term used in the market that explains the movement of the price of a given security in a predictable way during certain periods. Periods can sometimes mean months or seasons (Autumn/Fall, Winter, Spring, and Summer).
From the chart below, you can see that Nasdaq 100 futures tends to perform better in Spring and Fall than during the winter and summer seasons.
What moves the Nasdaq 100 E-mini — What affects the Nasdaq 100 E-mini the most?
The E-mini Nasdaq futures are sensitive to news releases and other economic factors. Some of them are:
- Fed rate decision: The stance of the Feds on interest rates can affect individual components of the index and move the E-mini Nasdaq futures.
- Change in price of individual components. The Nasdaq composite index is a market capitalization-weighted index, so the index move is more sensitive to the price change of stocks with higher market caps than the lower-cap stocks. Earning reports from a large-cap stock can have a significant effect on the index.
- Economic news: Macroeconomic news reports like inflation, jobs, manufacturing index, and so on can affect the price movement of the Nasdaq composite index.
- US Dollar Index: The US dollar index measures the strength of the currency against other economies. A stronger dollar is sometimes seen with the index growing while a falling dollar negatively impacts the market.
How are Nasdaq 100 E-mini futures traded?
E-mini Nasdaq futures contracts are available for trading on the CME Globex electronic platform and the CME Group’s exchange. Trades are open from 6:00 p.m. ET on Sundays to 5:00 p.m. ET on Fridays, with an hour break at the end of each trading day.
The contracts are listed quarterly (March, June, September, and December) for five consecutive quarters, plus four additional December contracts. The E-mini Nasdaq 100 futures contract is equal to the Nasdaq 100 index’s current value multiplied by $20. The price is given in US dollars and cents per index point. The contract is cash-settled, and trading ends on the third Friday of the contract month at 9:30 a.m. ET.
How do you start trading Nasdaq 100 E-mini futures?
To trade the E-mini Nasdaq futures, you must first open an account with a futures broker who can provide you with access to the CME exchange, where the futures contracts are traded. Your trades are cleared through the broker. To begin, you must open an account with a futures broker and fund it. Because futures contracts are leveraged securities, you do not have to put down the face value of the underlying asset to open a position; only a fraction of the initial amount is required.
Some brokers, such as IG, provide CFDs for speculative purposes. IG provides a CFD on E-mini Nasdaq 100 futures. The contract for difference (CFD) is an agreement between you and the broker to exchange the price difference between the opening and closing of your trades. The good thing about CFDs is that you don’t have to bother about contract expiry and rolling over to the next contract month if you have a long-term position.
What is the Nasdaq 100 E-mini trading at?
As of December 6, 2022, the Nasdaq E-mini futures is trading at 11615.75. You can see the current price on the CME Group’s website. Additionally, you can view the live chart on Tradingview.
However, note that the price may be different at the time you are viewing it since the market price is subject to change due to price fluctuations.
What’s the Nasdaq 100 E-mini futures hour?
The E-mini Nasdaq futures trade electronically on the CME Globex platform from Sunday 6:00 p.m. to Friday 5:00 p.m. ET with a daily maintenance break from 5:00 p.m. to 6:00 p.m. ET.
For BTIC, the trading hours are from Friday 6:00 p.m. – 4:00 p.m. ET. The trading schedule for TACO is from Sunday – Friday 6:00 p.m. – 9:30 a.m. ET. Monday – Friday 11:00 a.m. – 5:00 p.m. ET;
Where can I find trading charts?
You can find the chart for the E-mini Nasdaq futures from trading platforms that provide chart services. However, if your platform does not, you can use TradingView to view the charts of various securities. Although trading is free to use, you may need to subscribe to its Pro services to connect it to your broker. You can also access the TradingView chart from the CME platform.
Alternatively, you can make use of other free charting services like Barcharts or Yahoo Finance.
What are the trading symbols for Nasdaq 100 E-mini futures?
The trading symbol for the full contract is NQ. The product codes for the different services are as follows:
- CME Globex: NQ
- CME ClearPort: NQ
- Clearing: NQ
- BTIC: “NQQ”, “NQT”
What is the specification for the Nasdaq 100 E-mini futures contract?
One unit of the E-mini Nasdaq futures (NQ) is equivalent to the current price of the index multiplied by $20 (current value of the index X $20). The price is quoted in US dollars and cents per index point.
The contracts are listed for four consecutive quarters (Mar, Jun, Sep, Dec) which are listed for 5 consecutive quarters, and 4 additional December contract months. The contract is financially settled on expiry, and trading terminates at 9:30 a.m. ET on the 3rd Friday of the contract month. BTIC trading terminates at 4:00 p.m. ET on the Thursday before the 3rd Friday of the contract month while TACO trading terminates at 9:30 a.m. ET on Thursday before the 3rd Friday of the contract month.
Why should you start trading Nasdaq 100 E-mini futures?
The E-mini Nasdaq futures are traded for some of the following reasons:
- Speculation: Trading the E-mini Nasdaq futures contracts allow a trader to speculate on the direction of the Nasdaq index and profit from the price change. Additionally, futures contracts are heavily leveraged giving you the chance to trade on lower margins than you could on the main index.
- Diversification: You can use E-mini Nasdaq futures to diversify your investment portfolio to spread risk across multiple stocks instead of an individual stock.
- Hedging risk: You can use it to offset your position in the equities market – a common technique used by most institutional investment firms.
What is the contract size?
One contract of the E-mini Nasdaq futures is equivalent to the current value of the index multiplied by $20. So, the worth of a contract in dollars depends on the current price of the index. For instance, given that the current price is 11615.75 as of the time of writing, the dollar worth of one contract of the E-mini Nasdaq (NQ) would be $232,315 i.e. ($20 X 11615.75).
What is the tick size?
The tick size of one contract of the E-mini Nasdaq futures is $5 for outright trading on Globex and $1 for BTIC, TACO, and Calendar Spread.
What is the minimum price fluctuation for Nasdaq 100 E-mini futures?
The minimum price fluctuation for E-mini Nasdaq futures is 0.25 index points for outright trading on Globex and 0.05 index points for BTIC, TACO, and Calendar Spread.
Are there any ETFs?
Yes, these are some of them:
- Invesco Nasdaq 100 ETF (QQQM)
- Invesco QQQ (QQQ)
- Vanguard Information Tech ETF (VGT)
What factors affect Nasdaq 100 E-mini prices?
Many factors affect the price of the Nasdaq E-mini futures; some of them are:
- The movement of the highly weighted component stocks of the index, such as Apple, Tesla, Amazon, and Microsoft.
- Macroeconomic reports, such as GDP growth rate, interest rates, CPI, and so on
- Interest rate policy
- The state of the economy
- Sociopolitical events
What is the all-time high for Nasdaq 100 E-mini futures?
Based on the TradingView chart for E-mini Nasdaq futures, the all-time high of this contract is 16,676.50, which it reached on Nov 2021.
What are the biggest risks in trading Nasdaq 100 E-mini futures?
The inherent risk associated with trading any type of futures including the E-mini Nasdaq futures comes from large price movements, and since futures are leveraged products, the losses are calculated using the index value rather than the deposited margin. It means that if you trade with a 10% leverage, a 1% drop in price would lead to a 10% loss, and a 7% loss in a 70% loss in your trading capital, and any percentage drop larger than that will blow your account.
What is the settlement method?
What is the settlement procedure?
The settlement is by cash to the special opening quotes of the index on the day of final settlement which is normally the third Friday of the contract month.
What is the block minimum for Nasdaq 100 E-mini futures?
There is no block trade eligibility for this contract. For TACO on E-mini Nasdaq-100 Futures, the block minimum is 500.
For BTIC, the block minimum is as follows:
What is the difference between Nasdaq 100 E-mini futures and the CFD product for Nasdaq 100 E-mini futures?
Just like every other futures contract, the E-mini Nasdaq 100 futures are a leveraged product that tracks the Nasdaq 100 index. Futures have expiry dates, and unlike the futures contract, the CFD can be traded indefinitely. Not every CFD broker offers E-mini Nasdaq 100 futures though. Some offer CFDs that track the Nasdaq 100 index, rather than the futures contract.
Which forex pair is the same as Nasdaq 100 E-mini futures
Nasdaq 100 E-mini CFD
What are some important dates for this market?
These are a few of the important dates for the E-mini Nasdaq 100 index futures market:
- January 1985 when the Nasdaq 100 Index was created.
- June 21, 1999, when the Nasdaq 100 futures were introduced.
- 1999 when the E-mini contract debuted on the CME platform.
- November 2021 when the index futures market made its all-time high of 16,676.50.
What is the highest Nasdaq 100 E-mini has ever been — its all-time high?
Based on the TradingView chart for E-mini Nasdaq 100 futures, the highest level the contract ever traded was 16,676.50, which it reached in Nov 2021.
What is the lowest Nasdaq 100 E-mini has ever been — its all-time low?
Based on the TradingView chart for E-mini Nasdaq 100 futures, the lowest level the E-mini Nasdaq 100 index futures has ever reached is 797.50, which happened October 3, 2002.
Trading equity index futures can help you diversify your investment portfolio while potentially increasing your profit. If you want to trade the E-mini Nasdaq 100 futures, you must use a good Nasdaq 100 E-mini futures strategy.