Learning to Trade the Nasdaq and NYSE
|The New York Stock Exchange (NYSE) and the Nasdaq are at the heart of Wall Street; these two financial markets are closely followed by investment banking firms, institutional investors and individual investors around the world.
The financial instruments traded on the Nasdaq and NYSE are publicly-traded equity securities, this means that investors who place orders on these markets are essentially purchasing fractionary ownerships of either major companies or investment funds. These securities are popularly known as stocks, but they can also be shares of exchange-traded funds (ETF). All stocks have value that can fluctuate due to financial operations or market sentiment. Traders who purchase stocks are entitled to hold on to it until they choose to sell it at market value.
How the NYSE and Nasdaq Work
Wall Street is regulated by a number of American government agencies and professional organizations. As such, trading hours take place between 9:30 am to 4:00 pm, Monday through Friday. These markets closed during official holidays in the United States. There is some level of after-hours trading offered to investors who use certain platforms.
Individual investors and the public can access the NYSE and Nasdaq through retail binary options brokers such as PWRtrade, which offer a connection to these financial markets by means of trading accounts and online platforms.
Trading stocks on the NYSE and Nasdaq is a matter of looking up share prices and placing orders during the trading session. Online trading platforms can make this an easy endeavour with point-and-click order placement, instant price quotations, fast execution, news tickers, charts, signals, and other features that allow individual trader to fully participate in these markets.
NYSE and Nasdaq Trading Strategies
A significant part of Wall Street consists of institutional investors; these are usually investment banking firms such as Goldman Sachs or mutual fund companies such as Vanguard. Institutional investors tend to hold on to millions of shares of companies and ETFs for various reasons: they may want voting rights in the companies they partially own as majority shareholders, or else they may seek to profit from long-term stock appreciation.
Individual traders do not have the leverage of institutional investors; their portfolio balances do not allow them to take market positions worth thousands of shares. For this reason, it is more profitable for individual investors to seek trading strategies such as binary options.
Binary trading is a financial strategy that can be based on various markets. In the case of the NYSE and the Nasdaq, it is based on major stocks and benchmark indices such as the Dow Jones, the S&P 500 and others.
With this type of trading, investors do not have to enter the market by purchasing expensive stocks that may start losing value due to a bear market or corporate scandal. When traders take market positions, they only invest in the value of an option contract that may pay out under certain circumstances.
An example of a binary trade would be options contract on Microsoft (MSFT) stock, which trades on the Nasdaq. The trader does not have to risk his or her own capital by purchasing MSFT shares; an option can be a small investment that seeks to profit on whether the price of MSFT will either rise or fall during a certain period. Once the options contract reaches the end of the period, the trader pockets the profit if he or she was in the money; if not, the only loss would be the value of the contract itself.
Institutional investors and Individual traders
The massive leverage enjoyed by institutional investors allows them to make money when the stocks they hold gain just a few pennies on the dollar. To this effect, individual traders cannot normally compete against institutional investors.
Options trading lowers the NYSE and Nasdaq barrier of entry by giving individual traders the opportunity to participate and get returns on their investments. Nevertheless, options trading requires technical and fundamental analysis evaluation.
In the end, options trading is an opportunity for individual investors who want to participate in the Nasdaq and NYSE markets without having to worry about the intricacies of Wall Street.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
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