Nasdaq vs. NYSE: What Is the Difference?

 

If you are new to the world of stocks and trading, there is a lot of jargon and technical terms you'll need to know.

One of the more confusing things is the difference between NASDAQ and the NYSE. While they are both stock exchanges, they operate differently. And those differences can make a huge impact on how you invest your money.

If you are looking to learn more about NASDAQ vs NYSE, don't fret. We've put together a quick-start guide that outlines the differences between the two. Read on to learn more!

The NASDAQ Guide

NASDAQ stands for the National Association of Securities Dealers Automated Quotations. 

NASDAQ began in 1971, at the very beginning of the internet. It was started as an electronic stock exchange and remains completely online today. As such, it has no physical location.

The main stocks and securities that NASDAQ deals with are related to the technology field. This includes heavy hitters such as Microsoft and Apple, as well as emerging tech companies. 

Perhaps the biggest difference between NASDAQ vs NYSE is that NASDAQ is a market-maker exchange. This means that instead of individual brokers, stocks are traded and sold by market-makers, which are usually brokerage houses.

In short, market-makers buy, sell, and trade larger quantities of stock, usually to other market-makers. These market-makers compete with each other to earn investors.

Let's give a quick scenario: an investor sees that the asking price on a Microsoft stock is $100 per share. However, the bid price is $90. 

The market-maker purchased the stocks for $90 apiece and is now selling them for $100, for a profit of $10/share. This is how they mitigate risk and see a return on their portfolios. 

The NYSE Guide

The NYSE, short for New York Stock Exchange, is probably the most famous stock market in the world. 

Think about all the 1980's movies about Wall Street investors. The room full of ticker feeds and men in suits shouting and running around: that is the NYSE.

The NYSE is a physical location that began back in 1792 on 68 Wall Street in New York City. While the physical floor is still used, a lot of the electronic data is handled at another site in nearby New Jersey. 

The New York Stock Exchange is well-known for its blue-chip stocks. These are well-known and established companies, such as Johnson and Johnson or General Electric. 

Where NASDAQ is a market-maker exchange, the NYSE is an auction exchange. Instead of brokerage firms setting the stock prices, individual specialists from the respective companies run auctions on their stock daily.

If you are interested in learning more about investing in the NYSE, visit www.monexsecurities.com.au.

NASDAQ vs NYSE: Which One Should I Invest In?

NASDAQ vs NYSE? Which is better?

To sum it up quickly: both. To build a strong stock portfolio, it is a good idea to spread your investments out.

NASDAQ companies tend to be more volatile. Think of this as a "high risk, high reward" situation. Conversely, NYSE blue-chip companies are established and secure, but tend to grow more slowly. 

For more financial advice, be sure to visit the Money Saving Tips section of our blog!