The Nasdaq stock market is one of the largest stock exchanges in the world. The Nasdaq--short for National Association of Securities Dealers Automated Quotations--offers stock trading in over 3000 listed securities. The Nasdaq stock exchange was also the first electronic stock exchange in the world and the first to allow stock trading online. The Nasdaq revolutionized stock trading by offering a stock exchange model where stocks could be traded electronically.
The NASDAQ stock exchange was started in 1971, and is currently owned and operated by The NASDAQ OMX Group, which was formed after Nasdaq purchased Swedish OMX. Nasdaq also acquired the Philadelphia Stock Exchange in 2007.
Trading on the Nasdaq
Along with common stocks, the following types of securities can be traded on the Nasdaq stock exchange:
- Derivatives: A derivative is a security with values dependant on another underlying security. Options and futures are common types of derivatives.
- Debt/Bonds: Debt instruments like various types of bonds can be listed on the exchange.
- Commodities: Commodities contracts are agreements to buy or sale goods at a future date.
- Structured Products: These securities typically track a market index but have characteristics of bonds as well.
- ETFs: Exchange-traded funds are investments which track market indexes but have characteristics of mutual funds.
To be listed on the NASDAQ stock exchange, securities must meet criteria such as minimum number of publicly traded shares as well as market capitalization and cash flow thresholds.
The NASDAQ stock exchange provides additional stock trading hours to meet the needs of global investors. Even though actual business hours of the stock exchange are from 9:30 a.m. until 4:00 p.m. eastern time, pre-market stock trading is available before the stock exchange opens for business. After hours stock trading is also available after the stock exchange closes. Stock trading before or after the market closes allows investors to immediately act on information received even if the stock exchange is closed.