The Nasdaq futures contract (NQ) generally trades like most of the other equity indexes though it has a few twists and turns that set it apart from the crowd. For anyone who has traded seriously, it is those “twists and turns” that can spell trouble for the uninitiated when trading the NQ. The purpose of this article is to alert traders to some of the idiosyncrasies that are part of trading the NQ and how to adjust your trading to take advantage of the attractive parts of the contract and avoid some of the less-than-pleasant outcomes this instrument can cause.
There are times when this contract is very easy to trade, especially when it is trending. Of course, you might say all contracts are easy to trade when trending but the NQ (because of volatility) presents some unique challenges and can be profitable if you trade the contract correctly. The challenge in trading the NQ is to understand and profit from the volatile nature of the contract. This can be a double edge sword and the downside of volatility is the tendency of price action to move against your position at a high rate of speed.