What is NYSE, and Where to Start?

What is NYSE, and Where to Start?

We won’t delve into the history of NYSE and NASDAQ in this article. Instead, we will focus on practical aspects that often concern traders.

What are NYSE, NASDAQ, and AMEX?

The American stock market is rightfully considered the financial center of the world. Every day, stocks and other assets worth billions of dollars are traded here. Companies from around the globe strive to list their shares on U.S. stock exchanges.

• NYSE (New York Stock Exchange) is the oldest and largest stock exchange in the United States and the world. Its daily turnover is approximately $60 billion, with around 4,200 stocks worth $21 trillion circulating. Trading on the NYSE operates as an auction, and the entire transaction process is completely transparent. Recently, the NYSE has been actively employing NYSE Hybrid Market technology, which increases the speed and volume of electronic trading, reduces the influence of specialists, and provides more opportunities for online traders.
• NASDAQ (National Association of Securities Dealers Automated Quotations) is an electronic network connecting market participants. It was the first American electronic exchange. Quotations here are supported by numerous competing major market-making firms, each offering bid-ask quotes. On average, 14 market makers work with a single stock, earning on the spread and helping to reduce it. The exchange primarily trades stocks of approximately 2,770 companies specializing in innovative technologies, computing, and biotechnology.
• AMEX (American Stock Exchange) is a New York-based exchange where ETF and HOLDRS (depository receipts equivalent to several stocks of a specific industry) trading is most common. Trading on this platform is nearly automated. The requirements are more liberal compared to NYSE and NASDAQ, which has allowed young, medium, and small companies to list their assets for trading.

Using the Finviz service, one can obtain precise information about the instruments traded on these exchanges. As of the end of 2016, there were:

• 4,235 on NYSE,
• 2,771 on NASDAQ,
• 82 on AMEX.

Don’t forget about OTC market stocks, which are also available in the Fondexx terminals. Altogether, there are over 12,000 instruments, ensuring you always have options to choose from.

From a single trading platform, one can trade NYSE, NASDAQ, and AMEX stocks simultaneously. There are no significant differences in the principles of operation or the behavior of instruments across these platforms.

You can read more about the instruments available for trading here: stocks, ETFs, ETNs, and options.

Features of the Stock Market

Since most traders start with the well-known and "promoted" Forex market, it’s worth comparing the characteristics of the stock market (commonly referred to as "fonds") to Forex.

• On the stock market, even an ordinary trader can act as a market maker and influence the price of certain low-liquidity instruments, often possible with OTC stocks.
• Stock market trading terminals provide significantly more information than, for example, MetaTrader 4. Here, you can see the tape of trades and Level 2 prices, commonly referred to as the "price ladder."
• One of the most pleasing aspects for traders transitioning from Forex to the U.S. stock market is that quotations for the same instrument are identical across all brokers.

In terms of reliability and regulation, the stock market outshines Forex with its CFDs on 50 instruments, whose transactions cannot be tracked. We’ll aim to address this in future articles, where we’ll compare Forex and the stock market, delving into such concepts as A-book and B-book in Forex brokers’ operations.

A stock broker earns from commissions, which only appear when a trader performs stably. Thus, it’s in the broker's best interest for the trader not to lose money but to earn.

Although most information about American stocks is in English, a high level of English proficiency is not mandatory. Minimal language knowledge suffices for using screeners and analytical programs, while most analyses are available in Russian translations.

Trading or Investing?

What is the difference between trading and investing? Primarily, the holding period of a position.

• Trading can take the form of:

  • Scalping, where market presence lasts just a few minutes.
  • Intraday trading, where trades are opened and closed within a single session.
  • Holding positions for several days with overnight carries.

• Investing, on the other hand, involves buying assets and holding them. A classic strategy is buy & hold.

The variety of trading instruments on the American stock market and favorable conditions allow for both trading and investing on NYSE, NASDAQ, and AMEX. You can use individual stocks or entire sector ETFs.

For long-term investing, a deposit of at least $20,000 and leverage no higher than 1:4 is recommended.

Trading, in contrast, allows you to maximize your deposit. Intraday trading with leverage enables significant deposit growth over a few trades. However, risk management rules should never be neglected, avoiding opening positions, as traders say, "all in."