What is NASDAQ?

NASDAQ is an American stock exchange based in New York City. NASDAQ, which was originally an acronym for National Association of Securities Dealers Automated Quotes, is the second largest stock exchange in the United States in terms of the value of its securities, after the New York Stock Exchange (NYSE). Many of the world's largest technology companies are listed on the NASDAQ, including Amazon, Apple, Cisco, eBay, Google, Intel, Microsoft and Sun.

NASDAQ was born in 1971, and the stock exchange now contains around 3,200 publicly traded companies. A stock exchange is a place where people can buy and sell shares in a public company. The stock exchange helps the buyer and seller set a price by charging a fee for its service.

The NASDAQ is different from the NYSE in that its stock trading is, and always has been, done entirely electronically. For nearly its first two decades, stock trading on the NASDAQ was conducted through a computer and telephone bulletin board system. Now, however, trading on the NASDAQ is done using automated trading systems, with full reports on trades and daily trading volumes.

While the NYSE has the popular Dow Jones Industrial Average as its primary index, the NASDAQ offers the NASDAQ 100 as its primary index. This is made up of 100 of the largest companies by market cap listed on the NASDAQ. Companies on the NASDAQ 100 include companies from a variety of industries, as well as financial services companies, which are included in their own index. Each year, companies can be added to and removed from the NASDAQ 100, based on their market cap rating. An index is a collection of stocks, ranging from a few dozen companies to several thousand, that are combined to provide a snapshot of the performance of the entire market.

Each publicly traded company can only allow its shares to be traded on a stock exchange. When a company starts offering shares to the public, it selects a stock exchange to trade. Occasionally, a company will switch from one stock exchange to another.

When viewing the performance of stocks on a stock ticker, you will see stocks traded on the NASDAQ using a four-letter abbreviation, with only a few exceptions. Stocks listed on the New York Stock Exchange use a three-, two-, or one-letter abbreviation. When watching stock performance on a financial news TV channel or in a newspaper, you will see NASDAQ and NYSE stocks listed side by side.

The standard NASDAQ buy and sell session is from 9:30 am to 4 pm ET on most business days, excluding some holidays. Pre- and post-market trading sessions allow for buying and selling outside of standard market hours.