National Association of Securities Dealers Automated Quotations (NASDAQ)  stock market is an American stock exchange. It is the first global electronic marketplace for buying and trading securities focused on technology, as over 50% of the companies in the index are technology companies.

Nasdaq is the second-largest exchange in the world after the New York Stock Exchange (NYSE). Most of the world’s greatest innovators – the companies that will define tomorrow’s world, like Apple, Microsoft, and Facebook, are listed on the Nasdaq.

Juno Markets has partnered with the Nasdaq Composite Index, which tracks more than 3,400 companies listed on the Nasdaq exchange. Giving our traders the opportunity to trade with the largest companies by market capitalization with zero commission charged.

Origin of Nasdaq

Nasdaq stock market began operations on February 8, 1971, almost 200 years after the New York Stock Exchange was established in 1792.

In 1998 during the technology and dot-com boom, Nasdaq became the first stock market in the United States to trade online, using the slogan “the stock market for the next hundred years.”

Nasdaq was initially created by the National Association of Securities Dealers (NASD) but dissolved the relationship in 2006. In 2007, it then merged with Scandinavian exchange OMX to become the world’s largest electronic exchange.

The company created the first mobile Web version of Nasdaq.com in 2009.  Nasdaq became a leading company-solutions provider in 2013 by acquiring Thomson Reuters’ investor-relations, public-relations, and multimedia-solutions businesses.

That is not all; in 2017, Nasdaq Ventures were born. It is a global venture investing program focused on cultivating talent and technology advancement within financial services.  Today, Nasdaq is not just a stock market but also where young, successful companies look to for public capital solutions.

NASDAQ, Leader of Innovation

Like Steve Jobs, Co-founder of Apple, once said, “ Innovation distinguishes between a leader and a follower.”

When Nasdaq first started, it was launched to be a fast and computer-centric trading floor as opposed to the NYSE’s human floor traders. Nasdaq also created the Nasdaq-100 index in 1985, and in 1996, the Nasdaq site, www.Nasdaq.com, the first financial-exchange Web site went live.

Nasdaq Stock Market is a stock exchange rooted in technology as the world’s first electronic exchange; it was only fitting that the world’s technology giants chose to list with them. Nasdaq is also the first to use the cloud to store data, as well as the first to sell its technology to other exchanges.

With that tech heritage, the Nasdaq attracted a large number of technology-focused companies to IPO on its exchange. In 2019 they welcomed 97 IPOs, including Lyft, Zoom, and CrowdStrike.

The perception of Nasdaq components being innovators is core to their brands, products, cultures, and financial performance. Hence they attract the world’s most influential and innovative companies such as Tesla, Netflix, Oracle, Dell, and Cisco. Since Nasdaq is home to such a collection of thriving, cutting-edge companies, investors look to the Nasdaq to gauge how tech stocks are doing.

How does Nasdaq work?

As we mention above, Nasdaq has no actual trading floor and conducts all its business through an elaborate system of companies electronically connected to one another.

When market participants do not buy and sell to one another directly and all transactions go through a dealer, this is known as a dealers’ market.  In this case, Nasdaq is a market maker.

Unlike the specialist structure of NYSE, a designated market maker represents a particular stock, Nasdaq market makers compete with each other to buy and sell specific stock they choose to represent, and they hold a number of the stocks themselves. This competition guarantees buyers and sellers are getting the best prices.  More than 500 market-making firms provide liquidity for Nasdaq-listed stocks.

When a broker wishes to buy shares, the market makers will give two-sided quotations, buy and sell, meaning they state the bid and ask prices for a security in which they are making a market.

How many companies are in the Nasdaq?

Nasdaq Composite Index tracks all the Nasdaq exchange companies, a list with roughly 3,467 companies. Nasdaq trades shares in a variety of companies, from financial, industrial to consumer companies.

However, because of its history of being an innovative market maker, it has attracted a high percentage of high-tech exchange, trading many new, high growth, and volatile stocks throughout its existence. Over 50% of the companies in the index are technology companies.

Ten most extensive stocks in  Nasdaq Composite as of April 15, 2020: Microsoft, Apple, Amazon,  Alphabet Class C, Alphabet Class A, Facebook,  Intel,  Netflix, PepsiCo, Cisco Systems.

Juno Markets is currently offering most of them in their shares CFDs.

Nasdaq Trading Hours

Like the NYSE, Nasdaq is open for stock trading from Monday to Friday from 9:30 a.m. and 4:00 p.m. Eastern Standard Time. There are nine market holidays in a year when they are closed. Check out (https://www.nasdaq.com/stock-market-trading-hours-for-nasdaq) for the list of market holidays.

However, the Nasdaq marketplace offers traders to buy or sell stocks listed on it in pre-market and after-hours trading sessions, also known as Extended Markets. Pre-market trading hours are from 4 a.m. to 9:30 a.m. EST, while after-hours are from 4 p.m. to 8 p.m. EST.

Trading in the Extended Markets comes with a risk. The volatility tends to be much higher. There is less liquidity; fewer people are trading; hence prices will tend to move much more dramatically.

Why Trade Nasdaq?

Volatility

In general, the stock market tends to be more volatile than the forex market.  For example, the Nasdaq healthcare sector, it has some of the most prominent biotechnology companies such as Gilead, Vertex, and Regeneron. These companies are working on cutting-edge research, and it’s an excellent opportunity for those who want access to substantial price fluctuations and growth stocks.

Technology heaven

Nasdaq is a market in a constant state of self-review, improvement, adapting, and blending the best traits of its own system and exchanges.

“Our technology 46 years ago invented the electronic market. Our technology today powers over 100 markets around the world and has created the global standard for market functionality, speed, and performance.” – Adena Friedman, President, and CEO of Nasdaq; 2017.

Attractive vs. other markets

Compared to other indices, Nasdaq promises a better playing field with high liquidity and volatility. Contrasting Nasdaq with the world’s largest stock market, NYSE has over 2,400 companies listed and Nasdaq has over 3,300 listed companies.

Diverse trading vehicles

It is always essential to have a diversified portfolio. This can mean investing in shares of companies of different sizes and industries, sectors, and even countries. With Nasdaq, you have the opportunity to explore different kinds of industries, from energy to real estate.  For example, if one sector underperforms, that could be balanced out by an industry that suddenly takes off.

Transparency

Nasdaq has a strong belief that markets are more robust when they are transparent and create a level playing field for investors. Plus, US markets are often more transparent than in other countries. They have strict regulations, oversight, and federal exchange rules that make the Nasdaq market a relatively safe place to trade.

Factors to consider when trading shares.

Determine your Goal

The first step to picking investments is defining the purpose of your portfolio. Everyone’s goal for investing is to earn money, but investors may be focused on generating an income supplement during retirement, on preserving their wealth, or on capital appreciation. Different goals require a very different strategy.

Price

Price is one of the most important factors to consider when buying a share. Buying into the best company at the wrong time can lead to a loss in your investment. Do your research and stay aware of the daily news, trends, and events that drive the economy and every company in it.

Liquidity

Market liquidity affects everything from the bid-offer spread to trade execution. It measures the number of buyers and sellers that are present and if the transaction can take place with no delay. Highly-liquid stocks mean that positions can be entered and exited quickly without the price being hit.

Nasdaq vs. Dow Jones vs. S&P 500

 

  NASDAQ DOW JONES (DJIA) S&P 500
What is it? It is a stock market index created in 1971. It is the home of the technology market.  Oldest market index among the three indices. Dija was created in 1896 by the Wall Street Journal. Created by Standard & Poor’s in 1957. Is a stock market index that measures the performance of 500 companies listed on the stock exchange
What does it comprise of? ●      More than 3,300 companies listed in the Nasdaq composite index.

●      Technology is a dominant segment in the index; it also consists of well-balanced, diversified sectors such as consumer services, healthcare, consumer goods, and industrials, constituting the other 50%.

●      DJIA is run by the Wall Street Journal, whose editors choose which companies are in the index, circulating around the companies’ earnings.

●      It only tracks the performance of just 30 major companies, mainly of companies found on the New York Stock Exchange, with only a couple of Nasdaq-listed.

●      As of August 31, 2020, five popular DJIA companies are 3M, coca-cola, American Express, Goldman Sachs Group, and Johnson & Johnson.

●      Track the 500 largest publicly listed companies trading on either  NYSE or Nasdaq.

●      It accounts for 80% of the US stock market capitalization. It is often quoted in the papers and on news bulletins during reports that attempt to measure the overall US stock market and economy’s health.

●      S&P 500 tries to track the broader market. Their top performers are General Motors, Alaska Air Group, and Autodesk Inc.

Volatility difference Very volatile because of its high concentration in riskier, high growth tech giants such as Facebook, Amazon, and Alphabet (Google). Least volatile as many components are slower moving, blue-chip companies such as Boeing Company, United Healthcare, and 3M Company. S&P volatility is typically between Nasdaq and DJIA
Index value ●      Nasdaq value is based on the market capitalization average of the companies on the index.

●      The rise and fall of the Nasdaq stock market mostly depend on the performance of the technology sector.

●      DJIA performance is based on the 30 major companies as a group and not individual stocks.

●      Is a price-weighted index

●     The S&P is a float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading.
Index Calculation The NASDAQ average value equals the total aggregate value of the Index share weights multiplied by each security’s last price, then divided by the Index’s divisor.

The formula for calculating the index is NASDAQ-100 Index = Aggregate Adjusted Market Value / Divisor. The formula for the divisor is (Market Value after Adjustments / Market Value before Adjustments) x Divisor before Adjustments

  Dow Jones is calculated by adding up all the individual Index share weight prices of its 30 components and dividing the sum by the divisor. However, the divisor is regularly adjusted due to corporate stock splits or dividend payouts. S&P 500 index calculation involves finding the sum of the adjusted market cap of all included stocks, divided by a factor called a Divisor. The Divisor’s value is considered to be proprietary but is roughly 8.9 billion.

The formula for the calculation is S&P 500 Index = All S&P 500 Stocks / Divisor

 

We are obsessed with technology, providing some of the most advanced yet simple and intuitive tools to our partners and continuously working to create an even better trading environment for our clients. Hence we have partnered with Nasdaq offering US stocks CFDs. Clients will now have access to trade 20 of the world’s most recognizable companies with zero commission charged!

Get in touch to find out more.