What is the Nasdaq?

Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading.

How Does the Nasdaq Work?

The Nasdaq does not have a physical trading floor; it is entirely computerized. The exchange originally operated via telephone, but in 1970 it became computerized. The exchange lists about 5,000 stocks.

You often can tell whether a stock is listed on the Nasdaq (versus the New York Stock Exchange) by looking at its ticker symbol. Nasdaq stocks typically have four- or five-letter symbols (such as Microsoft: MSFT); NYSE stocks typically have three-letter ticker symbols (such as McDonalds's: MCD).

Why Does the Nasdaq Matter?

The New York Stock Exchange may be the world's most famous stock exchange, but the Nasdaq is equally important.