NASDAQ is the acronym of the National Association of Securities Dealers Automated Quotation. This market was established on Wall Street on February 8, 1971, and was the first all-electronic exchange in the world. Originally computers were only used to disseminate price information on a continuous basis and not to connect the operators: the passage of orders, until 1987, in fact, took place via telephone. The dissemination of quotations electronically, however, guaranteed a significant increase in market transparency and efficiency: for a long time, the Nasdaq was the stock market where spreads were lowest.
The entirely telematic transmission of orders, too, was established at the end of 1987. During the market crash that occurred in October of that year, the unsustainability of collecting orders by telephone appeared evident: given the numerous incoming orders, traders and dealers couldn’t physically answer the phones and the lines dropped frequently.
Currently, over 3,000 different companies are listed on this market, in some cases with multiple share classes, many of which belong to the technology sector (the index is in fact the main reference for all the securities in this sector). The Nasdaq is therefore the index with the largest number of companies present in the United States. Another important numerical value is that of daily trades: these are on average among the largest in the world (second only to those of the NYSE) for a capitalization of around 9.7 trillion dollars.
The company that operates the market itself, The Nasdaq Stock Market Inc. is traded under the ticker symbol NDAQ.
The index that summarizes the performance of this stock exchange is the Nasdaq Composite. It is a basket that includes more than three thousand securities, i.e. the majority of listed securities. The other important index is the Nasdaq 100, one of the most important globally among the large capitalization indexes, which includes 100 of the main non-financial companies, both American and foreign, listed on the Nasdaq.
The Nasdaq Composite is a free-float market capitalization index. Its total value is given by the sum of the weights of each security that constitutes it multiplied by the relative price. The final result is then divided by a correction factor which makes it more manageable in reporting.
NASDAQ and Volatility
Until a few years ago this index was known above all for its high volatility. The saying gets big fast spread, well summarized the dominant strategy in that period. Famous companies like Amazon or Google used the same plan.
They could hardly boast of real profits and all the money coming from investors was immediately turned into advertising or hardware and software development.
The majority of companies were therefore grossly overvalued. When the market rebalanced, the titles of the aforementioned suffered dizzying collapses which also decreed their end. There is no doubt that this series of events also led to an incredible development of information and technology in highly industrialized countries.
Today the situation is quite different. NASDAQ has lost its characteristic volatility and today represents one of the safest and safest stock market indices to invest in (as well as the Dow Jones or the Nikkei). Indeed, it can count on incredibly interesting stocks such as Facebook, Apple or Google.
How to invest in the NASDAQ
Investing in the NASDAQ index today is undoubtedly a very wise choice. The old volatility of the index is now only a memory. Furthermore, a good differentiation of securities must be considered, which makes each investment much less risky.
In fact, if NASDAQ is famous for stocks in the IT world, its basket also includes aerospace, pharmaceutical companies (such as Moderna which is winning the race for the vaccine for the Coronavirus), cars or telecommunications. Even Starbucks is among these stocks.
Among the various investment methods, it is also possible to invest in NASDAQ CFDs.
These are derivative instruments with which it is possible to adopt various strategies. In fact, it is possible to invest both long, by going to buy, and short, thus selling short.
Nowadays there are numerous platforms that allow practically anyone to try their hand at this activity. Without however asking for commission costs on operations.
Where to invest on the NASDAQ
This kind of platform is very common, however running into unreliable sites or, worse, some scam is very simple. However, it is even easier to avoid fraud: in fact, it is enough to check that these platforms have the right authorizations to operate, issued by important agencies and supervisory authorities.