What Is The NASDAQ?

The NASDAQ, the acronym standing for in its inception as the ¨National Association of Securities Dealers Automated Quotations¨ is a stock exchange based out of the United States.  The NASDAQ stock market was the first and completely electronically based stock market exchange in the world.  The NASDAQ currently trades over 3,700 companies on its market making it the world’s largest stock exchange is terms of volume of stocks transferred.  The NASDAQ was first created in the 1970´s and for its first two decades of operation was largely treated as a fringe market, similar to the pink sheets where penny stocks are traded or the Over-the-Counter Bulletin Board (OTCBB).  In the 1990´s that all changed for the NASDAQ.  In the NASDAQ, the stocks primarily traded consist of so-called tech stocks such as computer and software manufacturers, the bio-tech industry, and many other technology based companies.  In the 1990´s with the massive expansion of the internet and the .com bubble, the NASDAQ quickly gained prominence on the world stage for stock market exchanges.  It is currently merged with Dubai based and European based exchanges to make it poised to become the largest stock market exchange in the world.  The NASDAQ has gained so much prominence in fact that the NASDAW composite, its primary index of NASDAQ stocks´ performance, is watched as closely by investors as the Dow Jones Industrial Average.

How Trading Takes Place: NASDAQ Stock Market

The NASDAQ stock market, being completely digitalized, takes place via computers and what are known as Electronic Communication Networks. The ECN´s on the NASDAW operate the Small Order Exchange System, or SOES.  A fully computerized stock auction floor.  Stocks are bought, sold and trades executed all with these computers.  There is no floor such as in the New York Stock Exchange where investors are clamoring with paper ticket orders to move stock sales.  When it first began, the NASDAQ actually was operated by phone call placed orders to market makers representing their company´s stocks.  Famously in the October 1987 stock market crash market makers simply did not answer their phones to assist with transactions.  This led to the formation of the SOES and the current system is still in use today.  The NASDAQ, similar to the New York Stock Exchange (NYSE) offers pre-trading hours from 7:00am to 9:30am, regular trading hours from 9:30am to 4:00pm, and after-market trading hours until 8:00pm.  The NASDAQ stock market is open Monday thru Friday for trading.

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4. How Does After Hours Trading Work?
5. What Are Pink Sheets?