The NASDAQ operates differently from traditional exchanges like the NYSE. It is a dealer's market, meaning that transactions are facilitated by market makers rather than through an auction process. In an auction market, such as the NYSE, prices are determined through bids and offers, with most trades now executed electronically, though a physical trading floor still exists for certain functions. On the NASDAQ, market makers quote prices at which they are willing to buy and sell stocks, and all trades are executed electronically.
The absence of a physical trading floor allows the NASDAQ to operate with greater speed and efficiency. Trades can be executed almost instantaneously, making it particularly attractive to investors looking to trade frequently or take advantage of short-term market movements. The exchange’s electronic system also provides a high level of transparency, as all trades and quotes are visible to market participants.