The Nasdaq Stock Exchange

The national association of securities dealers automated quotations (Nasdaq for short) is nothing more than a large computer network.  Unlike the New York Stock Exchange, no stock on the Nasdaq stock exchange has ever been sold on a trading floor. 

Instead, brokers place buy and sell orders on a computer network and a financial company called Nasdaq monitors and maintains the network.  Nasdaq also tries to keep financial transactions on the network as orderly and fair as possible.  However, in practice this is difficult to accomplish. 

A few years ago Nasdaq was sued for letting spreads (the difference between the posted selling and buying price for the stock of a company) become too large.  In theory, the price you can potentially buy or sell a stock for should be the same.  In practice, they are slightly different.  This small difference is the commission that nasdaq keeps for making it possible for the transaction to happen.  Think of it as the tip you leave for the financial service rendered.

Since their lawsuit, The Nasdaq has tried to improve its image.  But it is still the wild west compared to the New York Stock Exchange.  Spreads between the selling and asking price for a Nasdaq-listed stock can be several dollars.  You must be willing to accept a little more risk to become a Nasdaq investor.