NASDAQ - Trade The NQ Futures

Mini-sized index futures trading offers several different contracts to trade including the NASDAQ Emini which tracks 100 of the largest companies listed on the tech heavy NASDAQ stock exchange. Introduced in 1997 as a smaller version of the standard futures contract, the NQ as it is called, is one fifth the size of the larger version and traded on the CME Globex Platform.

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Although not as popular as it’s cousin the S&P 500 ES contract, the NQ trades with excellent liquidity and volatility making it an outstanding choice for people utilizing a day trading or scalp trading methodology. The NQ trades in quarter increments or .25 with a minimum price fluctuation of .25 yielding $5. One total point equates to twenty dollars. For example:

If a trader went long the market with one mini NQ contract at 1130 and sold at 1155.50 he would have a profit of $510 with the equation represented as follows: 25.5 points x $20 = $510

All index futures contracts have expiration dates with each contract expiring every three months or four times per year. Expiry months are as follows; March, June, September and December with each month assigned a specific letter for it’s expiration month. March is assigned the letter H, June is M, September is U and December is Z.

The future contract will also have the year in which it expires included in its symbol. The symbol identifies what type of emini contract, expiration year and month it will expire. For example: A NASDAQ NQ contract which expires in December of 2012 would be designated by the symbol NQZ12.

Trading The NQ Futures

Since their introduction in 1997, mini NQ futures have grown into a popular financial instrument in which short term traders have chosen to both day trade and scalp trade. Since margin requirements are a great deal less than what is required for the larger contract, popularity is at all time high. Also, a few years ago regulators required a $25,000 minimum on all stock day trading accounts which eliminated many from day trading stocks with most moving over to emini futures trading.

Day Trading The NASDAQ NQ

Day trading is probably the most appealing form of trading approach for the NQ futures contract. Futures traders all have their chosen methods and trading systems to trade the mini NQ. Some may only open one trade daily and ride the market all day into the close, while others may initiate multiple trades during the daily session.

Some traders utilize a moving average crossover method, only opening trades when one moving average crosses over another. Others simply use pivot points as their method of trading, only entering trades when the market reaches certain areas of support and resistance. Pivot point levels are calculated using the previous day’s open, high , low and close which determines the current day’s major and minor levels of support and resistance as well as a pivot point level where the market is likely to change the trend and move in the opposite direction.

Others will use classic Japanese candlestick patterns to determine market entry and exit. Some will use indicators and oscillators to ascertain when the market is either overbought or oversold and likely to pullback, often using a contrarian view of the market. As you can see, NASDAQ NQ contracts are an excellent choice for utilizing a day trading method with a variety of approaches to the market.

NASDAQ NQ Scalping

Scalp trading the NQ is a method of profiting from the market where the trader expects to enter and exit the market rapidly, usually holding a position for only a few minutes. The idea is to “scalp” a point or two quickly exit the trade.

Sometimes executing many trades throughout the daily session, the scalp trader is not swing for the fences hoping to make huge gains with one trade. On the contrary, it can be said the scalp trader is happiest when he is out of the market since this method reduces exposure time.

With tight stops in place, the scalp trader knows he will not lose much on bad trades since he will quickly be out if the trade goes south.

Although this type of trading is used by many experienced traders, it is also an excellent choice for those new to emini trading. Using one contract, novice traders can get their feet wet and learn market dynamics as they build their confidence.

By using the scalp trading method, the rookie trader need not worry about a devastating loss if they follow traditional scalp trading rules and use tight stops and exit quickly once a trade turns sour.

Day trading or emini scalping, no matter which method is chosen, the NASDAQ NQ contract lends itself very well to either since the futures markets are volatile and liquid enough to make many trades daily. The NQ is an excellent choice for traders which have chosen to begin a index futures trading career

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