Nasdaq is the second largest stock exchange in the world, right after the New York Stock Exchange NYSE. Nasdaq focuses mainly on modern technologies, relying on large technology and IT concerns. The indexes will be presented in the article below Nasdaq Composite and Nasdaq 100 and not only. We will refer to their history and development, as well as indicate how we can trade them, e.g. via ETF.
⏰ National Association of Securities Dealers Automated Quotations [Nowy Jork, USA]
- Opening hours: Monday-Friday 9.00-17.00
- Now: Closed
- Time left to open: 00h 44m 34s
- Next opening: 2022-09-02 09:00:00
- Time zone: America / New York
The clock is for reference only. On public holidays – the stock exchange is closed.
History of the Nasdaq Stock Exchange
Nasdaq was founded in 1971 by the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA), and is one of the most traded exchanges in the world. It is a fully electronic exchange, so all transactions take place here only through the electronic system. This is where the shares of both small and larger technology companies from around the world are listed. In 1991, it was reported that the Nasdaq listed almost 50% of all stocks on US stock exchanges.
What is the Nasdaq Exchange?
All transactions on the Nasdaq exchange are online, which ensures a high level of security. The stock exchange connects technology companies listed on the stock exchange, incl. such as Microsoft, Apple, Netflix or Facebook. One of the reasons for the stock exchange’s success is that it is flexible in terms of acceptance. While the Nasdaq stock listing criteria are serious, the stock exchange tries to establish very good relations with any company, whether large or small.
What types of indices does the Nasdaq have?
- Nasdaq Composite Index is an index covering the shares of over 3,000 companies listed on the stock exchange. Nasdaq mainly lists high-tech companies, which means that the results of the technology sector can be seen thanks to the Nasdaq Composite index. 50% of the index includes technology companies, 20% consumer services and 10% healthcare. In addition, the index includes companies from the oil, utilities and telecommunications industries. Nasdaq Composite was launched in 1971 and included 50 titles at the time.
- Nasdaq 100 – an index of the 100 largest companies by capitalization listed on the Nasdaq. Financial companies are excluded from this index. The Nasdaq 100 presents the performance of publicly traded companies in the areas of telecommunications, computer software and hardware, biotechnology, and wholesale and retail. The companies tracked in the Nasdaq 100 index account for more than 90% of the Nasdaq Composite index market. In the case of the Nasdaq 100, technology companies also account for more than 50% of the index. This index was launched in 1985. At that time, the Nasdaq exchange presented two new indices, one of which was the Nasdaq 100 and the drum Nasdaq Financial 100. These indices were created so that the stock exchange would not still live in the shadow of the New York Stock Exchange – NYSE.
- Nasdaq Biotechnology – originally part of the Nasdaq Composite. It mainly consists of pharmaceutical and biotechnology companies. Companies included in this index are listed only on the Nasdaq.
- Nasdaq Financial – Includes financial companies that have been excluded from the Nasdaq 100.
What are the benefits of trading stocks on the Nasdaq?
- Very quick access to investors.
- Market transparency.
- Conditions conducive to continuous and immediate turnover.
- Shares can be sold and bought very quickly.
- Investors have access to the best prices.
- Since all prices are sent over the routing network, they can be easily viewed.
How do I invest in Nasdaq?
The Nasdaq offers a lot of room to show off, presenting a wide range of investment options. 3 of them are presented below:
- Buy stocks for cash – you can buy shares of not one, but several companies that are listed on the Nasdaq stock exchange. If you do not have a large initial budget and do not want to replicate an index with the same weight, analyze the subsectors you are interested in as well as individual securities and build your portfolio. However, it should be remembered that technology companies do not offer high dividends because they have to support innovation, research and development, which leads to the fact that part of the reserves is allocated to such activities. There are also other companies on the market, e.g. from the food or pharmaceutical sectors, in which you can invest by buying individual shares and not exposing yourself to greater losses.
- Index funds – a form of investment addressed to the average saver. Investing in funds is not a difficult task and, in addition, those interested receive a complete and diversified portfolio of securities. This form of investing on Nasdaq is worth rethinking as it comes with diversification, professional management, absolute liquidity, tax benefits, and financial futures.
- Financial derivative instruments – through them you can invest directly in the index. Investing in the Nasdaq 100 is made possible by selling or buying futures, or options on this index.
Is it worth investing in Nasqad?
One of the greatest benefits of investing in Nasdaq is the ability to participate in the technological profits of giants such as Tesla and Apple. Please note that investing in the Nasdaq requires an account with a brokerage house that acts as an intermediary in the execution of stock exchange operations in the markets they serve.