NQ and MNQ: the Nasdaq-100 contracts

Every trade on my public record, which is kept in a simulated account, is on one market: Nasdaq-100 futures. There are two main contracts for it, NQ and MNQ, and they track the same index point for point. The only real difference is size.

In this lesson you'll learn what the index is, how each contract is built, and why the smaller one is where most people should learn.

What the Nasdaq-100 is

Nasdaq describes the Nasdaq-100 as an index of 100 of the largest companies listed on the Nasdaq Stock Market. It leaves out financial companies such as banks. It is weighted by market value, so the biggest companies move the index the most.

In practice that means a handful of very large tech names carry a lot of weight. When they have a strong or weak day, NQ usually feels it. You don't need to follow every stock, but it helps to know the index leans toward big technology companies.

The contract specs

Here are the numbers that matter, straight from CME Group:

• NQ (E-mini Nasdaq-100): $20 times the index. One point is $20. The smallest move, a tick, is 0.25 point, or $5.
• MNQ (Micro E-mini Nasdaq-100): $2 times the index. One point is $2. A tick is 0.25 point, or $0.50.

So MNQ is exactly one tenth the size of NQ. Ten MNQ contracts equal one NQ contract in value. If NQ moves 10 points, one NQ position gains or loses $200. One MNQ position gains or loses $20.

How NQ moves

NQ has a reputation as one of the faster index contracts. In my own sessions it can cover a lot of ground in a few minutes, especially near the New York open or after a big news release. Other times it drifts in a narrow range for an hour.

I'm not going to give you a typical daily range here, because it changes with the market and with the price level of the index. The better habit is to look at your own charts. Open a few recent sessions and note how far price traveled from high to low. That tells you more than any average I could quote.

Why MNQ suits small accounts and learning

Size is risk. A 20-point stop on one NQ contract costs $400, while the same stop on one MNQ contract costs $40. The chart is identical, the setup is identical, but the dollars are ten times smaller.

That makes MNQ a good place to learn. Mistakes are cheaper, and you can size up in small steps. Going from one MNQ to two is a small change, but going from one NQ to two is a big one.

Smaller still doesn't mean safe. Most people who day trade lose money, and a micro contract only slows the losses down. Treat MNQ as a way to keep your risk small while you build a trading record, not as a shortcut.

The takeaway

NQ and MNQ track the same Nasdaq-100 index. NQ is $20 per point and MNQ is $2 per point, so 10 MNQ equal one NQ. Learn on the smaller one, where the lessons cost less.

Do this today

• Open an MNQ chart and an NQ chart side by side and confirm they move point for point.
• Write down the dollar value of one point and one tick for both NQ and MNQ.
• Look at five recent sessions and note the high-to-low range of each in points.

Check yourself

Answer each one in your head, then open it to check.