by John Border

The NASDAQ though we know it as an exchange is not an exchange, and works like an automated mechanism where buyers and sellers can meet. The NYSE works on the system called double auctions where in the highest bidding buyer competes with other buyers and the lowest bidding seller bids against other sellers.NASDAQ though not very old has give tough competition to NYSE.The technology focus has helped NASDAQ some inherent strengths.

In NASDAQ much like in the real world each broker or the dealer as you may want to call it has an inventory of shares which they are willing to sell and that means that they can easily assume that their inventory along with other broker’s inventory will be taken care of. In effect each order if fulfilled based on how much inventory or shares you are holding.

As an example I will show how …

by John Border

NASDAQ is relatively young but has been giving NYSE a run for its money. NASDAQ operates very differently than the NYSE as it works on a method called the double auction method. In this method the highest bidder competes with all the bidders on a buy and same goes for a sell.

As it happens in real world the borker or the dealer is assumed to have soem shares as well as some cash. So when the order comes up for fulfillment each broker isassumed to have an inventory whihc will need to be cleared at various prices. This is similar in the real world when you need to buy something you visit shop to shop.

The NASDAQ has two kinds or orders and these orders are the limit order as well as the market order. For market order you are willing to pay any price and …