Investors or foreign stock investors are certainly familiar with the name NASDAQ, which is the stock exchange in the United States. The NASDAQ 100 aka NDX Index is an index that houses the top 100 stocks in the US. So, how do you explain the definition of the NASDAQ 100 and the NDX Index in more detail? The NASDAQ 100 and the NDX Index are a collection — totaling 100 — of the most actively traded and listed US companies on the NASDAQ stock exchange. The NDX Index includes companies from various industries except for the financial industry, such as commercial and investment banks. The non-financial sectors included in the NAS100 include retail, biotechnology, industry, technology, health, and others. You can also go to http://www.cnie.org/forex/nas100-brokers.html to find out more information regarding NASDAQ100 and its brokers.
Considering the NDX Index and NASDAQ 100
The index is created based on a modified capitalization methodology. This modified method uses the individual weights of the items included according to their market capitalization. Weighting makes constraints to restrict the involvement of the biggest companies and adjusting the index with all members. To achieve this, NASDAQ reviews the composition of the NDX Index every quarter and adjusts the weighting if the distribution requirements are not met.
The US100 is traded through the Invesco QQQ Trust. This product is made to keep an eye to the performance of the top 100 biggest companies within the NASDAQ exchange. Each company in the trust must be a member of the NASDAQ 100 and be listed on the wider exchange for at least two years.
Also, listed stocks must have an average daily trading volume of 200,000 and quarterly and annual public earnings reports.
A few exceptions are made for newly public companies which have a very high market cap. Companies with bankruptcy issues were removed from Invesco QQQ Trust. Sometimes, the composition of the trust may not be the same as the NDX Index, but the main aim of QQQ is still to track the price and performance of the underlying index.