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How to short the Nasdaq

Find out how to short the second biggest stock exchange in the world.

In turbulent times, it’s a given that people want to short the Nasdaq, given that it’s the second largest stock exchange in the world. While it’s unlikely that you can get exposure to the entire stock exchange, you can invest in Nasdaq ETFs or in the Nasdaq Index.

What does “shorting” the Nasdaq mean?

Short selling, or “shorting,” is a trading method that allows you to take advantage of a decrease in an asset’s value. You short a stock by borrowing it from a broker to sell it, then purchase it back later at a (hopefully) lower price. It’s particularly popular to short a stock or market when there’s a stock market crash, such as during the COVID-19 pandemic.

How to short the Nasdaq

There are loads of different ways that you can short the Nasdaq. The most commonly used method for the average investor is to invest with inverse exchange-traded funds (ETFs). Another method is to take a short position on Nasdaq-listed stocks with derivatives.

Invest in inverse ETFs

Inverse ETFs track an underlying index, such as the Nasdaq. But instead of following the index closely, an inverse ETF moves in the opposite direction. So, let’s say the Nasdaq rises in value by 2%. An inverse ETF tracking it will decrease in value by 2%.

People generally invest in inverse ETFs to earn profits in a very short period of time, which is why these funds can also be called “ultra-short funds.”

Leveraged inverse ETFs can give you 2X or 3X the exposure you’d usually get. “Leverage” is effectively borrowing, so it’s possible to lose more than your initial investment with this method. Make sure you understand the risks before investing.

How to short the Nasdaq with derivatives

Another way of shorting the Nasdaq is to take a short position on Nasdaq-listed stocks (like Apple, Amazon, Netflix and Tesla) using derivatives such as options or futures. This allows you to bet on a stock’s change in price without actually owning the stock.

With a stock option, you can buy or sell a stock at a specified price during a certain period of time. If you agree to buy and sell a stock in the future at a specific price and the price ends up being lower, you’ll make a profit.

With a futures contract, you agree to buy or sell a stock at a predetermined price on a specific date. You’ll profit if, for example, you agree to sell at a higher price than a stock is worth at the time of transaction.

Alternatively, you can open a position on the Nasdaq 100 index, as long as the provider you choose allows you to do so.

How to invest in the Nasdaq

How to short the Nasdaq: Step-by-step

  1. Choose a provider. There are loads of different platforms out there, and they’re popping up all the time! Look closely at fees and features to make sure the platform you choose offers the types of investments you want.
  2. Open an account. You may need to provide some details, like your Social Security number (SSN) or proof of ID.
  3. Deposit funds into your account. If you’re investing in a foreign fund, you may need to pay a foreign exchange fee to convert your funds.
  4. Take a short position or invest in a Nasdaq inverse ETF. Usually, you can start trading as soon as your account is set up and funded.

Compare stock trading platforms

1 - 4 of 4
Name Product Asset types Stock trade fee Minimum deposit Signup bonus
Robinhood
Stocks, Options, ETFs, Cryptocurrency
$0
$0
Get a free stock
when you successfully sign up and link your bank account.
Make unlimited commission-free trades, plus earn 3% interest on uninvested cash in your account with Robinhood Gold.
TradeZero
Stocks
N/A
$200
N/A
Trade from anywhere with the #1 source for shorts.
TradeStation
Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency
$0
$2,000
$50 - $5,000
when you open an account with minimum $5,000 using the promo code TSTVAFYB
A platform built for all kinds of traders and all styles of trading.
TD Ameritrade
Stocks, Bonds, Options, Mutual funds, ETFs, Currencies, CDs, Futures, Forex
$0
or $25 broker-assisted
$0
N/A
TD Ameritrade features $0 commission for online stock trades. Online options fees are $0.65/contract.
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Compare up to 4 providers

1 - 5 of 5
Name Product Asset types Stock trade fee Minimum deposit Signup bonus
Tastyworks
Stocks, Options, ETFs, Cryptocurrency
$0
$0
$200 in US stocks
when you open and fund an account with min. $2,000 for 3+ mos.
Trade stocks, options, ETFs and futures on mobile or desktop with this advanced platform.
Robinhood
Stocks, Options, ETFs, Cryptocurrency
$0
$0
Get a free stock
when you successfully sign up and link your bank account.
Make unlimited commission-free trades, plus earn 3% interest on uninvested cash in your account with Robinhood Gold.
Vanguard Personal Advisor
Stocks, Mutual funds, ETFs
$0
$0
N/A
Financial advice powered by relationships, not commissions.
Webull
Stocks, Options, ETFs, Cryptocurrency
$0
$0
Get up to 12 free stocks valued up to $30,600
when you open an account and make a deposit. T&Cs apply.
A beginner-friendly broker that offers paper trading, so you can try the platform before depositing funds.
TD Ameritrade
Stocks, Bonds, Options, Mutual funds, ETFs, Currencies, CDs, Futures, Forex
$0
or $25 broker-assisted
$0
N/A
TD Ameritrade features $0 commission for online stock trades. Online options fees are $0.65/contract.
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Compare up to 4 providers

How is the Nasdaq performing?

What is the Nasdaq index?

The Nasdaq index, also known as the Nasdaq Composite, is made up of over 3,000 stocks listed on the Nasdaq stock exchange.

Some of the biggest stocks in the world are on the Nasdaq, including the FAANG stocks—Amazon, Google, Apple, Facebook and Netflix.

Stock trading: How to get started

Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

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