How to short the NASDAQ

Find out how to short the second biggest stock exchange.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 62%-78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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 method of trading that allows you to take advantage of a decrease in an asset’s value. You short a stock by borrowing the asset 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 coronavirus stock market crash.

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 the NASDAQ with CFDs.

Invest in inverse ETFs

Inverse ETFs track an underlying index, such as the NASDAQ, but instead of following it closely, it moves in the opposite direction. So let’s say the NASDAQ was to rise in value by 2%, an inverse ETF that’s tracking it will decrease in value by 2%.

People generally invest in inverse ETFs to get profits in a very short period of time. It’s for this reason that they can be known as “ultra-short funds”.

You can get leveraged inverse ETFs, which can give you two or three times the exposure that 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 know the risks.

How to short the NASDAQ with derivatives

Another way of shorting the NASDAQ is to take a short position using derivatives. This allows you to take a position on the stock without actually owning it. You could do this by taking a short position on a selection of the stocks that are on the NASDAQ, like Apple, Amazon, Netflix and Tesla.

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

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! Make sure you don’t choose one willy nilly – have a look at the fees and features and make sure it offers the types of investments you’re looking for.
  2. Open an account. You’ll need to open an account with your chosen provider. You may need to give some details, like your National Insurance number or show some ID.
  3. Deposit funds into your account. If you’re investing in a foreign fund then you may need to pay a foreign exchange fee to convert your funds into dollars.
  4. Take a short position or invest in a NASDAQ inverse ETF. You can often start trading as soon as your account is set up and funded.

Compare CFD trading accounts

warning iconWarning: Between 74-89% of retail investor accounts lose money when trading CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Name Product Spreads from What you can trade Link
City Index CFD
City Index CFD
0.5 points
Forex, commodities, indices, cryptocurrencies, shares
Go to site
70% of retail CFD accounts lose money
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Pepperstone CFD
Pepperstone CFD
0.0 pips
Forex, indices, commodities, cryptocurrencies, stocks
Go to site
78.6% of retail CFD accounts lose money
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Plus500 CFD
0.01%
Shares, commodities, forex, indices, cryptocurrencies
Go to site
72% of retail CFD accounts lose money
More Info
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IG CFD
IG CFD
0.3 points
Forex, commodities, indices, cryptocurrencies, shares, ETFs, bonds, interest rates, sectors
Go to site
71% of retail CFD accounts lose money
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
eToro CFD
eToro CFD
N/A
Stocks, commodities, currencies, indices
Go to site
67% of retail CFD accounts lose money
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Saxo Markets CFD
Saxo Markets CFD
2 points
Stocks, indices, forex, commodities, options and bonds
Go to site
62% of retail CFD accounts lose money
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. The value of your investments can go down as well as up. Losses can exceed deposits on some margin products. Professional clients can lose more than they deposit. All trading carries risk.
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How did the the NASDAQ perform in 2020?

The NASDAQ fared the coronavirus pandemic pretty well. It ended with a gain of 42.87% over 2020. Only time will tell how it will perform in the ongoing coronavirus pandemic in 2021.

What is the NASDAQ Index?

The NASDAQ Index, also known as the NASDAQ Composite, is made up of over 3,000 stocks and shares that are listed on the NASDAQ exchange.

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

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

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