NASDAQ



intro – nasdaq:

NASDAQ could refer to either the US stock exchange or the NASDAQ Composite stock index. So, we will discuss both in this article. And the reason for that is – NASDAQ Composite stock index, includes almost all stocks listed on the Nasdaq stock market. Initially, at the time of it’s formation, NASDAQ stood for National Association of Securities Dealers Automated Quotations.

To qualify for listing on the exchange, a company must be registered with the United States Securities and Exchange Commission (SEC), must have at least three market makers and must meet minimum requirements for assets, capital, public shares, and shareholders. Another key point, is that NASDAQ quotes are available at three levels –

  1. First Level shows the highest bid and lowest ask—inside quote.
  2. Second Level shows all public quotes of market makers together with information of market dealers wishing to buy or sell stock and recently executed orders.
  3. Finally, third Level is used by the market makers and allows them to enter their quotes and execute orders.




NASDAQ history of NASDAQ

NASDAQ was founded in 1971 by the National Association of Securities Dealers (NASD). Nasdaq stock market was the world’s first electronic stock market. However, initially it was a quotation system without electronic execution. The NASDAQ Stock Market eventually took over majority of over-the-counter(OTC) trades.

In 1981, Nasdaq traded 37% of the U.S. securities. Then, in 1998, it was the first stock market in the United States to trade online. Its main index is the NASDAQ Composite, which has been published since its inception. NASDAQ-100 index was introduced in 1985 to track the largest 100 companies. In 1992, Nasdaq teamed up with London Stock Exchange to form the first intercontinental linkage of capital markets. In 2000, the National Association of Securities Dealers divested Nasdaq to form a public company.

Today, it is ranked second on the list of stock exchanges by “market capitalization of stock traded”, behind the New York Stock Exchange. The exchange platform is owned by Nasdaq Inc., which also owns the Nasdaq Nordic stock market and several U.S. stock and options exchanges.





NASDAQ trading schedule

The times (in the Eastern Time Zone) are:

  • 4:00 a.m. to 9:30 a.m. Extended-hours trading session (premarket)
  • 9:30 a.m. to 4:00 p.m. normal trading session
  • 4:00 p.m. to 8:00 p.m. Extended-hours trading session (postmarket)




NASDAQ NASDAQ market tiers

There are three different market tiers:

  • Capital Market small cap
  • Global Market mid cap
  • Global Select Market large cap




Stock Index Prediction variables and factors that impact NASDAQ index


dollar(USD) rate in fx markets

Firstly, as USD appreciates in value, this causes a drop in foreign investment, since foreign investors get less USD for their currency. Hence, large global investors will not use their USD reserves to buy US stocks. On the other hand, depreciation of USD will make US stocks cheaper. Hence, the index will rise in this scenario.


inflation

Secondly, higher inflation means depreciation in the value of USD and that the US companies are able to sell their goods and services at higher prices. Therefore, the index will rise in the short term as companies are bringing in more cash. However, this will then, translate to higher employee wages and higher cost of goods and raw materials. Hence, high inflation over a long period of time, will cause the index to drop in the long term.


interest rates

Thirdly, short and medium term interest rates spike will impact the stock index. This is because higher rates will mean a (relatively)risk free alternative to stocks – a more risky asset. However, long term high rates will lower bond yields. Therefore, the large investors’ money will move to stocks, causing the index to spike.


and the rest

Finally, other factors such as unemployment rate and PMI(Purchasing Managers Index) also impact the index. For instance, high unemployment rate will imply drop in consumer demand and this would cause a downward trend for stocks. In contrast, a higher PMI in the US will mean an increase in economic activity. Thereafter, leading to higher employment and a high demand for goods and services produced by US companies.






NASDAQ final comments

It is important to spend some time learning the history and basics. This time spent will yield dividends when you are trying to predict movement of an asset. Also remember that you are more rational before you place a trade. So, it’s important to set some rules. If you like market conditions and they fit what your rules suggest, go for it. If the conditions for the rules don’t fit what you see in the markets, don’t trade for it’s own sake. You don’t have to trade every day. The point of having rules is to run them to your favour, and not let them run you.

Day trading follows the same rules we use for life. Successful trading is the art of using knowledge and skills at the right time. It is also essential to set some limits once you open a position. For example, you may impose a limit on yourself to not keep a trade open for more than 20 days. Finally get access to good tools that can help you achieve your trading goals. It’s best to try out a lot of things on paper money accounts before risking your capital.

Despite of all the rules, limits and right mindset, random events will happen. So always have a contingency plan. A perfect system or rules don’t exist. And, this is a good thing. Otherwise, someone will work it out and own half of the free world. All algorithms, tools, systems and rules are based on a snapshot of data. So always pay attention to news and data on a given day.





Stock Index Prediction how to apply this to trading

STOKAI provides daily prediction using algorithms based on all factors that impact Nasdaq Composite price. Then, it evolves this over 10 days in the future. Tutorial and brief user guide is available here – Tutorial. If there are any issues, please contact our customer services team.





NASDAQ

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