The NASDAQ though we all know it as an exchange isn’t an exchange, and works like an automatic mechanism where buyers and sellers can meet. The NYSE works on the system called double auctions where within the highest bidding buyer competes with other buyers and therefore the lowest bidding seller bids against other sellers. Now for NASDAQ the auction method doesn’t work, it’s kind of a series of dealers which are selling stocks and every dealer has some sort of inventory of stocks also as cash. Now NASDAQ is totally automated so going by above analogy you are doing not visit each dealer shop instead the pc system visits the shop of every dealer and checks what prices and the way much shares does each dealer need to satisfy an order.
Now there are two sorts of orders order and limit order. allow us to say that you simply simply have a limit order which suggests that you are neither willing to shop for above that set limit nor willing to sell below that price. order means you’re saying that at whatever price the dealer is holding the inventory the system should plow ahead an buy that. So what happens when the dealer only has 500 shares and you place an order for purchasing 1000 shares at market price? For the fulfillment of this order you’ll get 500 shares of the order at the stated price and another 500 shares at the worth the dealer says it got somebody to sell the shares to you. Now this price could also be higher or below the worth at which you bought the initial 500 shares.
NASDAQ as you’ll see is that the interdealer market represented by securities dealers and these dealers are called market makers. These dealers then compete with one another to post their best prices (both bid and ask). a traditional non professional can have access to the present bid offers, ask size, size of every offer and that they are called level II quotes. The system that provide the quotes is named Small Order Execution System, Find out more about the system here on http://www.nas100brokers.com/volatility75index.html.