My brother called me last month. He’d just put some money into what he kept calling “Nasdaq stocks” and wanted to brag about his 15% returns. Good for him, I guess. But when I asked him to actually explain what is Nasdaq, he fumbled around for like two minutes before admitting he wasn’t totally sure himself. He just knew his financial advisor told him it was a good move.
That got me curious. I mean, we hear about it constantly on the news. “Nasdaq hit a new high today.” “Tech stocks dragged down the Nasdaq.” But what IS it really?
Turns out it’s way simpler than the finance people make it sound.
Back in the Old Days (Well, 1971)
Stock trading used to happen on actual floors with actual people. The New York Stock Exchange still had that setup where traders wore those colored jackets and literally yelled at each other all day. Sounds exhausting, honestly.
Nasdaq started on February 8, 1971, and its big idea was basically “what if we don’t do any of that?” They set up the first all-electronic exchange. No floor. No shouting. Just computers talking to computers. People back then probably thought it was weird. Now everybody does it that way.
The name stands for National Association of Securities Dealers Automated Quotations, which is a mouthful. Thank god everyone just says Nasdaq.
Why All The Tech Companies Ended Up There
So what is Nasdaq, and how does it work that makes it THE place for tech companies?
My friend Angela works in investor relations for a mid-sized software company. She explained that when companies decide where to list their stock, cost matters. Nasdaq charges less in listing fees than the NYSE.
For a young company that’s burning through cash trying to grow, saving a few hundred thousand dollars on fees is huge.
But there’s more to it. There’s this whole perception thing. If you’re a tech startup going public, listing on Nasdaq sends a message. You’re saying, “We’re innovative, we’re forward-thinking, we’re part of the new economy.” It’s branding, basically.
That’s why Apple, Amazon, Microsoft, Meta, and Google’s parent company, Alphabet, all trade there. When you’re on the same exchange as those giants, it looks good.
What is Nasdaq vs. Dow—The Actual Difference?
This confused me forever until someone finally explained it properly.
The Dow Jones Industrial Average tracks 30 companies. Just 30. These are massive, old-school companies like McDonald’s, Boeing, and Walmart. The Dow’s been around since 1896, which is crazy when you think about it. In 2024, it went up 12.88%.
The Nasdaq Composite tracks more than 2,500 companies. Most of them are tech-focused. Last year, it jumped 28.64%, which is more than double what the Dow did.
But before you think, “Wow, Nasdaq is always better,” remember that it works both ways. When tech stocks crash, the Nasdaq can drop hard and fast. I learned that the expensive way during that rough patch in early 2022. Not fun.
How Many Companies Are in the Nasdaq?
As of December 2024, around 4,075 companies had their stocks listed there. They break it down into three tiers. The Global Select Market is for the biggest, most established companies. The global market is the middle tier. Then the capital market is for smaller companies still building themselves up.
Getting listed isn’t automatic either. You need to meet financial requirements, keep your stock price above certain levels, and follow a bunch of corporate rules. Some companies get delisted when they can’t maintain the standards. I remember when that happened to a company I owned shares in. That was a bad day.
How It Actually Works When You Buy Stock
Okay, this part took me a while to wrap my head around.
When you buy stock through Nasdaq, you’re not buying directly from another person or the company. There are these middlemen called market makers. These are firms that always have stock ready to buy or sell. They make money off the tiny difference between their buying price and selling price.
What is Nasdaq and how does it work in practice? Let’s say you want to buy Tesla stock right now. You open your Robinhood or Fidelity app, click buy, and it happens in seconds. A market maker just sold you those shares from their inventory. They’ve got thousands or millions of shares they’re constantly buying and selling to keep things liquid.
The NYSE does it differently, more like an auction where buyers and sellers meet up directly. Nasdaq’s system is usually faster, which matters when prices are bouncing around.
Who Owns Nasdaq?
Here’s something that made me laugh. Nasdaq Inc., the company that runs the exchange, is itself publicly traded ON the Nasdaq exchange. The symbol is NDAQ.
So you can literally buy shares of the company that operates the marketplace where you’re buying those shares. It’s like Inception but for stocks.
They went public in 2002. Before that, it was owned by NASD, which was a broker-dealer organization. Now, anyone with a brokerage account can own a piece of it. I looked it up once, thinking maybe I should buy some NDAQ shares. Decided against it. Seemed too meta for me.
It’s Not Just America
Most people don’t know this, but Nasdaq Inc. actually owns a number of European stock exchanges, too. They run markets in Sweden, Denmark, Finland, Iceland, and some Baltic countries. Seven countries in total.
My cousin studied abroad in Stockholm and actually visited the exchange there for a class project. She said it was pretty cool. Not sure what I expected her to say, honestly.
What is NASDAQ in Forex?
The forex market is where people trade currencies such as dollars for euros, yen for pounds, that kind of thing. Nasdaq isn’t technically a forex thing.
BUT, and this is where it gets confusing, forex traders can place bets on whether the Nasdaq index goes up or down. They’re not buying actual stocks. They’re using these derivative products that track the index.
I tried to understand forex trading once. I gave up after about an hour. Too complicated for my blood. Regular stock trading is risky enough.
Nasdaq Today—What’s Happening in 2025
The Nasdaq has been all over the place this year. It hit record highs above 22,660 earlier, mostly because everyone’s going crazy for AI stocks. Companies building AI infrastructure and data centers are getting ridiculous valuations.
But then in October, there was this massive drop of over 3% in one day. Trade tensions with China heated up again, and there was drama about a potential government shutdown. Tech stocks freaked out.
My coworker Dave, who watches this stuff religiously, says October is always volatile. Something about fund managers repositioning for year-end. I just know it makes me nervous to check my portfolio during October.
The Real Deal with What is the Nasdaq Index
When news anchors say “the Nasdaq”, they usually mean the Nasdaq Composite Index. It’s basically an average of all those thousands of company stock prices combined into one number.
If the Nasdaq Composite goes up 2%, that means tech stocks generally had a good day. If it drops 2%, tech had a rough day. It’s a quick temperature check on how that sector is performing.
There’s also the Nasdaq-100, which tracks just the 100 biggest non-financial companies on the exchange. That one gets less attention, but some people prefer it.
Why Does Any of This Matter
Look, I’m not a financial expert. I’ve made good stock picks and terrible ones. But understanding what the is Nasdaq helps you make sense of the financial news you hear every single day.
When someone says their 401k took a hit because “the Nasdaq dropped”, you’ll know they’re talking about tech stocks pulling back. When your uncle brags about his Nasdaq returns at Thanksgiving, you can actually follow the conversation instead of just nodding along.
Plus, if you’re investing any money, even just a little bit, in a retirement account, knowing where those companies are listed and what it means gives you context. Context is good. Context stops you from panicking when things dip or getting overconfident when things surge.
The Nasdaq isn’t some mysterious Wall Street thing that only suits in Manhattan understand. It’s just a digital marketplace that happened to attract most of the tech companies we use every day. That’s it.
And honestly? Once you get past all the jargon and the complexity people pile on top of it, the basic concept is pretty straightforward. Companies need money. Investors have money. Nasdaq connects them. Everything else is just details.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always consult a licensed financial professional before making investment decisions.