NASDAQ
The NASDAQ is one of the best known stock exchanges in the world. These days whenever stock market information is presented invariably the NASDAQ is presented alongside the New York Stock Exchange. This is because the two of them are by far the most important exchanges in the country. The surprising thing is just how different the two of them are. They operate in dramatically different ways and this is something that you should understand if you are going to be trading stocks.
The NASDAQ stands for the National Association of Securities Dealers Automatic Quotations and it is the largest electronic stock exchange in the world. What makes it different from other exchanges that you may be familiar with is that there are no floor brokers. Unlike the New York Stock Exchange where you will see brokers yelling at each other and making hand gestures in order to make trades on the NASDAQ all trades are made by computer. The NASDAQ is best known for having a heavy emphasis on technology stocks the reason for this is in large part based on how the exchange got started.
The NASDAQ was formed in 1971 as a simple computer bulletin board to make it easier to sell over the counter stocks. Over the counter stocks are the ones that are not traded on a stock exchange, the buyer and the dealer make the trade between themselves. This obviously requires a way for the buyer and the seller to find each other. This is what the NASDAQ was, a bulletin board that helped people who were looking to trade the small stocks that were sold over the counter to find each other.
As time went by the NASDAQ started adding more and more features until it had become a fully fledged stock exchange. This included things like adding trade and volume reporting. Although the exchange started out as a computer bulletin board in order to bring together buyers and sellers most of the actual trades were made over the phone. This all started to change in the late eighties as a result of the stock market crash of 1987. When this happened a lot of market makers simply stopped answering their phone which made it virtually impossible for trades to be made. As a result of this automated trading was introduced that allowed trades to be made by computer.
Over the years the NASDAQ has had a reputation for being the most innovative of markets. They were the first to allow online trades to be made for example. The NASDAQ is also the place where most technology company stock is traded, in large part because of the fact that they can be traded online. This has resulted in it becoming one of the biggest and most successful stock exchanges in the world. Recently they have taken over a number of other stock exchanges which has greatly increased their size as well.