Trading on the Nasdaq Market
Thousands of stocks are traded electronically using computers and telephones on the Nasdaq Stock Market.
The Nasdaq Stock Market was the worlds first electronic market when it opened in 1971. Now dozens of markets around the world are screen based, including those in London, Paris, Tokyo, and Hong Kong.
Trading on the Nasdaq is through an open market, multiple dealer system. Those dealers, or participating firms, are called market makers and compete to handle transactions in individual stocks. Thats a contrast to the auction market system used on traditional exchanges, where all the buy and sell orders in a stock must go through a single specialist. And since there are a number of market makers, and everyone trading in the system is linked electronically, transactions can be handled more quickly.
A market maker posts buy and sell quotations for a guaranteed number of shares usually one round lot, or 100 shares. When an order arrives, the market maker fills it at the posted price or finds a buyer or seller to complete the trade. All quotes are displayed on the Nasdaq quote montage.
The first electronic communications network (ECN) was introduced in 1997. Computer-based ECNs match buy and sell orders at the same price automatically and anonymously, eliminating the bidding process that's characteristic of both market-maker and auction markets.
Reading Nasdaq Tables
Few Nasdaq companies have tended to pay dividends, in part because many of them prefer to put earnings back into the business.
Nasdaq Small-Cap Issues
Some of the companies do pay dividends on preferred stock offerings, so that information is reported immediately following the name when it applies.
Trading activity in the stocks varies from more than a million shares during a day to as few as 100.
When the system was developed in the 19th century, one-letter symbols were especially prestigious, since they were given to the most actively traded stocks. Thats no longer necessarily the case.