The US100, commonly known as the Nasdaq 100, is a prominent stock market index that tracks the performance of the 100 largest non-financial companies listed on the Nasdaq Stock Market. It is widely regarded as a tech-heavy index, reflecting the growth and innovation within the technology sector, but also includes companies from other non-financial sectors like consumer services, healthcare, and industrials. Understanding the US100 is essential for traders and investors who want to gain exposure to some of the most influential and fast-growing companies in the United States.

Unlike broad market indexes such as the S&P 500, which includes companies from a wide range of sectors, the Nasdaq 100 has a distinct focus on technology and growth-oriented firms. Major tech giants like Apple, Microsoft, Amazon, Alphabet (Google), and Tesla often dominate the index due to their market capitalization and influence. Because of this concentration, the US100 tends to be more volatile and growth-driven compared to more diversified indices.

The Nasdaq 100 is a market capitalization-weighted index. This means that companies with larger market capitalizations have a greater impact on the index’s overall movement. The formula for calculating the index value is:

Formula: Index Value = (Sum of adjusted market capitalizations of all 100 companies) / Divisor

The divisor is a proprietary figure that Nasdaq periodically adjusts to account for corporate actions such as stock splits, dividends, or changes in the listed companies, ensuring continuity and comparability over time.

Traders often gain exposure to the US100 through various instruments such as futures, options, Exchange-Traded Funds (ETFs), and Contracts for Difference (CFDs). For example, a trader using CFDs on the US100 can speculate on the index’s price movements without owning the underlying stocks. Suppose a trader believes that the tech sector will continue to rally due to strong earnings reports from key companies like Apple and Microsoft. They might buy a US100 CFD at a price of 15,000 points. If the index rises to 15,500 points, the trader gains 500 points, which translates to a profit depending on the contract size and leverage used.

However, there are common misconceptions and mistakes to be aware of when trading or investing in the US100. One frequent misunderstanding is assuming the index represents the entire Nasdaq market or all tech stocks. In reality, it excludes financial companies and smaller firms that are part of the broader Nasdaq Composite. Another mistake is ignoring the index’s sector concentration risk. Because the US100 is heavily weighted towards technology, it is more sensitive to sector-specific risks such as regulatory changes, technological disruptions, or shifts in consumer preferences. Traders should also be cautious with leverage when trading CFDs or futures on the US100, as the volatility can lead to significant gains but also substantial losses.

People often search for related queries like “US100 vs Nasdaq Composite,” “best ETFs tracking Nasdaq 100,” or “how to trade Nasdaq 100 futures.” Understanding these distinctions can help traders choose the right instruments and strategies. For example, the Nasdaq Composite includes over 3,000 stocks and offers broader market exposure, while the US100 targets the largest and most liquid companies, making it a preferred choice for those seeking focused exposure to top tech names.

In summary, the US100 (Nasdaq 100) is a vital index representing the leading non-financial companies on Nasdaq, especially within technology. Its market cap weighting, concentration in tech giants, and volatility make it an attractive but complex instrument for traders. Knowing how it’s constructed, its risks, and typical trading methods can help investors make informed decisions and avoid common pitfalls.