Most of us have heard of the NASDAQ Stock Exchange. But when it comes to seeing how it works we’re probably pretty much in the dark. Most people simply accept it is there. Learning how it does work can be a good education in gaining a better understanding of it as a whole.

The NASDAQ is a world record holder in that it was the first stock exchange to be run electronically. Its birthday was back in 1971 and it has come a long way since. It is operated by computer and is owned by the organization that forms the first four letters of its name – the National Association of Security Dealers. The AQ part of the name stands for Automated Quotations.

Since a stock exchange must be able to cope with people exchanging stocks with each other, the NASDAQ uses a complex series of computer programs to ensure this is easily done. So if you buy or sell stocks on the NASDAQ Stock Exchange, you will be taking advantage of these computer programs yourself. The exchange is also able to figure out the opening and closing prices of every stock on the exchange. Needless to say it would take far longer if all this was done by hand.

The NASDAQ starts off by providing dealers with an interface they can use to actually use the system. They won’t see all of it – just the part that they are required to see. A lot goes on in the background all the time.

Beyond this there is a huge computer facility that has the necessary software to find and connect people who want to buy and sell at the same rate. If this didn’t exist the process of buying and selling would be made a lot harder.

Then of course the NASDAQ needs to have all the necessary information to ensure they can provide the right prices and the right offers to the right people. If the system wasn’t able to keep up with the current prices and events on the market, the whole thing would soon come crashing down.

So you can see that the NASDAQ Stock Exchange has plenty going on behind the scenes to ensure everyone is able to buy and sell the shares they have their eye on. Next time you use it, spare a thought for everything that goes on in the background.

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