How to Invest in the NASDAQ

Founded in 1971, the NASDAQ lists over 3,000 companies and, in terms of share volume, is one of the most heavily used stock markets in the United States. Traditionally heavy in technology companies, the NASDAQ spearheaded the dot-com boom of the late 1990s and remains at the forefront of electronic communication network (ECN) trading.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Licensed stockbroker (recommended)
• Capital to invest
• Financial adviser (recommended)

1. Spend some time researching the most actively traded companies on the NASDAQ, as well as companies that are experiencing higher-than-normal trading volume.
2. Set up a trading account with an online or traditional brokerage and make an initial deposit. Remember not to bet the farm on the stock market. Instead, ensure you have a contingency plan in place by reserving an emergency fund to cover your living expenses in case an unexpected market turn results in capital losses.
3. Decide on a company (or a list of companies) to watch by following the NASDAQ index, working with your financial adviser to determine which industries are currently hot to invest in and doing your homework on companies you feel have profit potential. Always take the time to review a company's trading history and financial statements before you invest, keeping in mind that you can review a specific company's public records free of charge through the Securities and Exchange Commission (SEC).
4. Use the investor tools at the NASDAQ homepage to familiarize yourself with the top companies listed on the NASDAQ exchange (see Resources below). Though these change from time to time, as new companies grow and established companies fall off, you can get an up-to-date list by checking the NASDAQ-100 list of the exchange's top 100 companies.
5. Invest in a company listed on the NASDAQ by placing an order with your stockbroker or buying directly through your online-trading account. If you opt for the latter, make sure that your order is filled correctly.
6. Watch your investment closely by signing up to receive stock alerts through the NASDAQ website or through your brokerage. You can also use the Internet to track quotes, keeping in mind that most sites offering stock quotes do so with at least a 15-minute delay.

Tips & Warnings

• The NASDAQ is generally considered one of the more volatile major North American stock indexes. Research carefully before you invest in a company listed on it.