Nas100 or US100 is one of the most traded forex indexes. Whether you have traded the Nas100 index or not, but you probably have heard about this volatile index in your trading career. Nas100 is one of the most popular FX assets under indices and depends on fundamentals, news, and events.
You can use two strategies to trade Nas100:
- One using technical analysis
- Another is by fundamental analysis
Moving forward, you can use indicators or naked price action trading in technical analysis. So now the question is, which trader are you? The one who uses indicators or the one who uses the price movements to trade the market.
Using indicators can be profitable, but not always. Almost all the indicators are lagging and will not let you see the actual picture of the market. So this is where price action strategies prove themselves.
What is price action?
Price action strategy is considered one of the most widely used trading techniques used by professional and successful traders. The philosophy is simple — use the chart and the asset’s price movement and patterns.
Price actions are the strategy you use by using the candlesticks and their price patterns without any indicators.
What are indices?
Indices are a computation of the price performance of a group of company shares from an exchange. For example, the UK 100 tracks are the most extensive traded index that comprises the 100 largest companies on the London Stock Exchange. Trading indices enables you to get exposure to an entire economy or sector at once while only having to open a single position.
Indices are calculated according to the movement of the total companies listed in that particular index.
What backgrounds matter a lot?
- Company’s total worth
- Market capitalization
- Overall performance
The company with less market value will have a more negligible effect on the index price concerning the larger value company.
What is Nas100?
The NASDAQ, Nas100, or US100 index consists of the top 100 big technology companies. Nas100 has initially launched in 1971 to gauge the price movement of these 100 big tech companies together.
The NASDAQ index includes big names like Microsoft, Tesla, Seagate, Intel, Apple, Adobe, Cisco, Activision Blizzard, NVIDIA, Netflix, etc. While the tech sector primarily dominates the NASDAQ, it also boasts companies from aviation, consumer services, and healthcare.
Trading Nas100 using price action
You can trade both long and short while dealing with NAS100 and profit from the market. However, keep in mind never to take the trade using technical analysis before a major new release.
The golden strategy to trade NAS100 is to always go for buys and try to take fewer sells.
Indices like NAS100 have top 100 tech companies that mean these companies have a high probability of going high in prices most of the time. Their company shares will go high over the period hence pushing NASDAQ price higher.
To trade NAS100 using price action, you need to first see the overall market daily by recognizing the swing lows and swing high.
- If you see the price making higher highs and lower lows, it is an uptrend, and that is what we are interested in, in making buys.
- On the other hand, if you see the price making a lower high, lower low, you will go for a sell without holding it for too long.
After that, you need to come to a 4hr time frame and draw your support, resistance, and trendlines. Then, moving forward, you will try finding the price action patterns: double bottom, double top, head and shoulders.
If you see price-holding support or a resistance zone, you will wait for the break and retest to take the trade. Price retest will help you win greater risk: reward.
Support and resistance on the 4hr chart will be dynamic and major zones. Now move on to 1hr TF and wait for wait and retest by ensuring you have at least 3-4 1hr candles staying at a particular zone.
You will then move to a 30min TF for trade confirmation and execution of trades.
Final thoughts
Trading any asset is risky and hence requires proper knowledge. Trading NAS100 is not that easy because of its volatility — the factor why traders make a lot of money trading this asset, but it’s also a reason for losses. By trading a less volatile market, we pay more commission to the broker. In comparison, a volatile market will charge less commission if you combine NAS100 trading with a good strategy, and with some fundamental strategy, you can have a higher probability of wins.
Maintaining too tight SL is not a good risk strategy because trading NAS100 as the price can fluctuate a lot hitting your SL and throwing you out of the market.
