NASDAQ: what is and how it works
Published: 19 October 2021 by Andrew
NASDAQ is one of the main indices of the US stock exchange, that is a basket created to collect the most important stocks in the technology sector listed on the American financial markets.
Today, however, its roster does not include only the titles of the IT sector such as the most famous Google, Amazon, Facebook, Cysco System, IBM or Apple.
In fact, the index covers sectors that are also quite different from each other (among the stocks present, to give an idea, we can also find those related to American Airlaines, Hasbro or even PepsiCo).
The NASDAQ was founded only on February 4, 1971. Then it saw its real debut on the stock exchange four days later, entering with a price of just 100 points, arriving today as an investment asset coveted by many traders.
In this guide we deepen the NASDAQ discourse, also proposing the best platforms to invest in a simplified way and WITHOUT commissions, like eToro (official website here).
As for eToro, it is important to emphasize that it is the only investment platform in the world that allows you to copy, in a transparent and automatic manner, everything that the best traders in the world do.
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Here we can see the NASDAQ real time price quotation:
From the graph it is possible to observe the real-time quotation of the NASDAQ, a value that reflects the general trend of the companies contained within it.
With the tools available, it is also possible to monitor the recent trend, so as to have a clear idea of the current trend.
NASDAQ: what is it
NASDAQ, based in New York in the iconic Times Square, was born on February 4, 1971, bringing together the major computer titles on the market.
The strong volatility characteristic of this index lasted until a few years ago. The period of maximum volatility occurred between the end of the nineties and the beginning of the new century.
At the time, also due to the rapid mass diffusion of internet lines, the famous dot-com bubble burst.
Due to the exaggerated expansion of the IT market, a huge number of very low capitalization companies began to emerge at the end of the century. They were convinced that they could exploit the great interest that the market reserved for this type of company.
Although many of these had very few if not even a single shareholder, not to mention the profits that were zero. However, many of these companies managed to attract convinced investors in their future expansion.
NASDAQ, as it is easy to guess, is an acronym. Its meaning is “National Association of Securities Dealers Automated Quotation”.
You may also have heard of NASDAQ 100, which includes the 100 largest non-financial companies listed on Nasdaq by market capitalization.
Unlike the basic NASDAQ, listed on major platforms with the NDAQ ticker, the NASDAQ 100 index is present with the NQ ticker.
The Wall Street Stock Exchange, a reference for the NASDAQ (and also for the NYSE), opens trading at 9:30 am and closes at 4:00 pm New York time.
By adjusting the times to the European time zone, we will have that trading on the NASDAQ is possible from 15:30 to 22:00.
The pre-trading phase begins one hour earlier, thus going from 14:30 to 15:30 (Paris time zone). The hours are valid all year round (except for extraordinary and festive closures) from Monday to Friday.
Until a few years ago, this index was known above all for its high volatility.
The saying get big fast spread, which summarized the dominant strategy in that period. Famous companies like Amazon or Google were adopting the same plan.
They could hardly boast of real profits and any money from investors was immediately turned into advertising or hardware and software development.
The majority of companies were therefore heavily overestimated. When the market rebalanced, the securities 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 IT and technological development in highly industrialized countries.
Today the situation is quite different. NASDAQ has lost its characteristic volatility and today represents one of the most stable and safest stock indices to invest in (as well as the Dow Jones or the Nikkei). In fact, it can count on incredibly interesting titles such as Facebook, Apple or Google.
NASDAQ is famous for being the stock exchange where some of the best stocks in the world are listed. Just to give an example, on the Nasdaq there are the actions of:
- Google (Alphabet)
- Cisco Systems
How to invest in NASDAQ
Investing in the NASDAQ index today is undoubtedly a very wise choice.
The old volatility of the index is now only a memory. In addition, good differentiation of securities must be considered, which makes any investment much less risky.
If in fact NASDAQ is famous for titles in the computer world, there are also aerospace, pharmaceutical companies (such as Moderna which is winning the race for the Coronavirus vaccine), cars or telecommunications companies. Even Starbucks is among these titles!
Among the various investment modes, it is also possible to invest in NASDAQ CFDs.
These are derivative instruments with which it is possible to adopt various strategies. It is in fact possible to invest both long, 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 NASDAQ
This kind of platform is very common, however, running into untrustworthy sites or, worse, some scam is very simple.
However, it is even simpler to avoid fraud: it is enough to check that these platforms have the right authorizations to operate, issued by important agencies and supervisory authorities.
Among these the most important are certainly:
- CySEC (Cyprus Securities and Exchange Commission)
- ESMA (European Securities and Markets Authority)
- CONSOB (National Commission for companies and for playing the stock market)
- FSA (Financial Services Authority)
eToro was born as an online trading platform in 2013 from an offshoot of the company of the same name founded in 2006 by the Assia brothers in collaboration with David Ring.
Despite the young age of the platform, it immediately managed to make its way into the difficult online investment market. In this way it has achieved such results as to make it one of the absolute leaders in the sector.
Among the most interesting features is the large number of very unique and useful, if not revolutionary, tools offered to users.
Among these, the famous tool called Copy Trading deserves an honorable mention.
With this service it is possible to literally copy every operation made by the most famous and experienced traders. Watch the video explaining Copy Trading here.
In this way, even the most inexperienced users will be able to operate on more interesting and safe assets. Of course, not even the gurus of finance are absolutely infallible. Precisely for this reason eToro provides a second very useful tool.
This is the Copy Trading Stop Loss. This tool allows you to set a threshold below which every investment is automatically blocked, thus always going to avoid huge losses.
The platform also has a well-maintained “social area”. This feature is much more important than it may seem. Keeping in constant contact with other traders, following their development or simply exchanging ideas and approach strategies is absolutely essential to grow in this sector and bring home good results.
In summary, it is an excellent platform for investing in NASDAQ CFDs. In addition to the aforementioned peculiar instruments at its disposal, the range of assets on which to invest is very wide and varied, thus satisfying everyone a little.
Try Copy Trading yourself and invest with eToro. You can open an account with only 200 euros here!
From 2017 onwards Trade.com has started a major re-foundation work, coming to permanently occupy the podium of the most successful platforms currently on the market.
What we are facing today is a technologically very interesting site, lean and well-finished, with many valuable features.
First of all, Trade.com uses two different platforms. The most interesting and used is undoubtedly WebTrader.
This platform is really easy to use and will be very familiar after just a few minutes. It guides the user to the more than 2100 different assets available, satisfying even the most demanding and sophisticated investors.
Among the features on the platform, TradingCube allows you to view different securities simultaneously and with related characteristics, making everything much faster and more efficient.
What Trade.com has made real leaps and bounds on in the last two years, becoming one of the leaders in the sector, is the offer of financial indicators and trading signals among the best in circulation, which improve the possible technical analysis to users, helping them to develop increasingly effective strategies.
Different types of accounts are also offered, meeting the needs of the most diverse traders. The minimum deposit available is just 100 euros, allowing even the less wealthy and inexperienced to start investing.
For more experienced users, accounts of 1,000, 10,000, 50,000 and 100,000 euros are available.Try Trade.com's WebTrader and open an account with only 100 euros!
NASDAQ: Useful Investment Tips
Investing is never a simple activity. The myth of enrichment without lifting a finger must be absolutely denied.
Investing means study, training, dedication and continuous updating. To develop truly winning strategies, you need a lot of commitment and a good understanding of how the market works.
Furthermore, this is a world in constant evolution, it is therefore unthinkable to believe that you no longer need to study, even if you are a great trader or finance guru.
Absolutely profitable assets could go through even very acute bearish phases, vice versa small unknown companies could quickly become very advantageous stocks.
There are many factors to take into account.
Among these, as already mentioned, there is the reliability of the platforms with which it was decided to operate to be considered. If a broker has little information about their account and is based in a tax haven, it is likely a fraudulent company.
All platforms that do not have relevant authorizations, issued by one of the aforementioned supervisory authorities, should be avoided.
Important factors to keep in mind, more purely related to the world of finance, are for example the distribution of dividends.
With this formula is meant the division of a part of the profits of a company, which it decides to divide among its shareholders.
This is an absolutely optional action and it is only the board of directors or the CEO who can implement it.
It is a move that aims to make shareholders more loyal and participatory, who in this way have greater incentives to invest.
This phenomenon, however, while being quite positive in and of itself, generally has more or less negative effects on the stock market.
In fact, on the days in which the distribution takes place, the shares of the company in question tend to suffer negative declines. Therefore it is very important to keep this dynamic in mind.
As mentioned, this is an absolutely optional choice: Amazon, for example, has absolutely never shared any profit among investors, who despite everything seem quite loyal.
Furthermore, it is always recommended not to invest in too many stocks belonging to the same sector. In the event of a crisis in the sector, it is better to always have stocks belonging to different market segments in the quiver, so that only part of the investments go bad.
Being an investor means always remaining vigilant and attentive to everything that happens on the market. There is certainly work to be done but, all in all, it can be said that anyone can invest, wealthy or not, as long as they dedicate the right commitment.
Summing up, investing for this index is a highly recommended choice.
The ancient volatility has now completely disappeared and the large number of stocks on its roster, even very different from each other, provide the right diversification to invest more safely.
In addition, there is certainly the quality and thickness of the titles proposed to be considered: companies of the caliber of Google, Facebook or Amazon are all in excellent health and undoubtedly represent excellent titles from every point of view.
The term stands for the following words: National Association of Securities Dealers Automated Quotation
The characteristic of the Nasdaq is to collect the main technological companies.
No, since the very beginning it has been a completely telematic index.
Among the most famous, we point out Amazon, Apple and Facebook.