Here’s Everything You Need to Know About This Stock Exchange
If you’re watching financial news or setting up your 401(k), you’ve likely heard of Nasdaq. Nasdaq is the second-largest stock exchange in the world, second to the New York Stock Exchange (NYSE), and home to tech giants like Apple, Google, and Amazon..
Since its introduction in 1971, the Nasdaq exchange has grown to include more than 4,000 company listings including many of today’s biggest corporations. As the value of these companies rises and falls with the economy, so does the value of any portfolio with listings on the Nasdaq exchange.
“Nasdaq has always been an electronic exchange and looked to the future of capital,” says Carol Schleif, deputy chief investment officer of BMO Family Office, a wealth management firm. “Nasdaq has a reputation for being innovative, which is why so many tech stocks list there.”
But exactly what is the Nasdaq and how does it work? Let’s take a look at one of the most widely recognized stock exchanges.
What Is Nasdaq?
The term Nasdaq is the original acronym for the National Association of Securities Dealers Automated Quotation. The name goes back to its beginnings, when it was started by the National Association of Securities Dealers (NASD), a predecessor to the Financial Industry Regulatory Authority (FINRA).
In 2006, the Nasdaq separated from the NASD and became a separate entity. The following year, in 2007, Nasdaq announced that it would combine with the OMX Nordic Exchange to become Nasdaq OMX.
After the New York Stock Exchange (NYSE), Nasdaq made history when it introduced the idea of an electronic stock exchange in 1971. Its reputation lives on as one of the most well-known exchanges in the United States, according to Joseph Hogue, CFA, an investment analyst and founder of the investing education.
“Nasdaq was the first electronic exchange,” Hogue says. “It allowed investors to buy and sell stocks through a computerized system, as opposed to the physical trading floor on the NYSE”
Today, much of the trading on the NYSE also takes place electronically, Hogue points out. The two popular exchanges have a lot of similarities in operation. The NYSE still abides by a hybrid model and, other than during the COVID-19 shutdown, still uses floor traders for some of its transactions. And even though Nasdaq is known for its electronic trading, it has a physical headquarters in New York City, and almost 40 offices around the world.
Why we chose this value
Nasdaq is among the most volatile securities, and fits perfectly with our short-term strategy. It allows us to gain a lot over short periods of time, and not to remain unnecessarily exposed in an uncertain market.
Our dangerous times are better for traders than for long-term investors