If you're thinking about NASDAQ trading, the NASDAQ composite index contains all of the stocks that are listed on the NASDAQ. The NASDAQ composite index is one of the most-watched indexes in the world because it has companies that promise high growth. It consists of more than 4,000 companies. You’ll have plenty of stocks to choose from if you decide to trade them individually. One factor you’ll need to consider is that the exchange is volatile because it’s speculative.

If you want to be a successful trader, you must know all of the indices that make up NASDAQ. These indices consist of stocks that are Internet and high technology companies. When considering trading NASDAQ indices, you want to use them in the following ways:

1. Use the NASDAQ 100 index as your guide for investing in NASDAQ companies
2. Trade telecommunications stocks using the NASDAQ telecommunications index
3. Trade biotechnology stocks using the NASDAQ biotechnology index

Action Steps
The best contacts and resources to help you get it done

Use the NASDAQ 100 index for investments in NASDAQ companies

The NASDAQ-100 index only lists non-financial companies. In other words, you will not find any banks or other financial service companies listed here. The NASDAQ 100 index consists of the largest domestic and international companies that are listed on the NASDAQ. There are currently 13 foreign companies listed on this NASDAQ equity index.

I recommend: OptionsXpress has an index directory and shows useful information on the stock of companies on the NASDAQ equity index, pertaining to price. You’ll also want to check out TD Ameritrade. You can customize and watch up to 21 indices, including the NASDAQ index, on your screen.

Use the NASDAQ telecommunications index for investments in telecommunications companies

The NASDAQ Telecommunications index contains a list of telecommunications companies that promise growth and high returns. This includes manufacturers and providers of land line, cellular, and fiber optic technologies.

I recommend: Scottrade Inc. allows you to monitor the NASDAQ telecommunications index. Of course, you’ll have to be a member to view and research companies. After you subscribe to TradeStation, you can find the companies that make up the NASDAQ telecommunications index and start trading.

Use the NASDAQ biotech Index for investments in biotechnology companies

The NASDAQ biotechnology index consists of biotechnology companies, based on the Industry Classification Benchmark. These companies are leaders or pioneers in discovering new drugs or advanced technologies to combat diseases. Biotechnology covers a large area, including pharmaceutical, genetics, bio-chemistry, and other disciplines.

I recommend: E*Trade has more than 75 NASDAQ equity indices where you can execute trades. You can also purchase Barclay’s iShares to trade on the NASDAQ biotechnology index. These shares can be purchased through a broker or trading platform. Barclay’s iShares lists both the top five holdings and sectors of the index.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Consider trading index ETFs (exchange traded funds), like iShares, if you're new to NASDAQ trading. These will help to reduce your losses, but give you the opportunities to invest in the stocks that interest you.