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: Step-by-step
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.
Open an account. You may need to provide some details, like your Social Security number (SSN) or proof of ID.
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.
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.
Our pick for short selling: Interactive Brokers
$0 stock trade fee
Access to 150 global markets
Margin lending rates of 3.58% to 4.58% (with IBKR Pro)
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.
Paid non-client promotion. Finder does not invest money with providers on this page. If a brand is a referral partner, we're paid when you click or tap through to, open an account with or provide your contact information to the provider. Partnerships are not a recommendation for you to invest with any one company. Learn more about how we make money.
Finder is not an adviser or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.
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.
Zoe was a senior writer at Finder specialising in investment and banking, and during this time, she joined the Women in FinTech Powerlist 2022. She is currently a senior money writer at Be Clever With Your Cash. Zoe has a BA in English literature and a Diploma for Financial Advisers. She has several years of experience in writing about all things personal finance. Zoe has a particular love for spreadsheets, having also worked as a management accountant. In her spare time, you’ll find Zoe skating at her local ice rink.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.