The Nasdaq exchange does tend to regularly evidence more volatility than its major competitor, the New York Stock Exchange (NYSE), but it is far from being the most volatile stock exchange in the world. The highest volatility rates per exchange are nearly all located in Asia.

Volatility: A Positive or a Negative?

Volatility is definitely a concern for stock market investors, but there is substantial disagreement between investors and market analysts regarding the question of whether increased volatility is a good thing or a bad thing.

Volatility is commonly associated with higher risk; some equity metrics used to identify the risk level of an investment are just measures of volatility. However, some analysts argue that higher volatility is closely correlated with larger upward moves in stock prices, so higher volatility portends higher profits for investors. Day traders prefer more volatile stocks, as those are the stocks that offer more opportunity for intraday profits.

Nasdaq and NYSE

The Nasdaq and the NYSE are the two largest exchanges worldwide. Of the two, the NYSE has a larger total market capitalization. The primary operational difference between them is that Nasdaq trading is completely electronic, while the NYSE still uses market specialists to facilitate trades. It is less expensive for companies to do an initial public offering (IPO) or to be listed on the Nasdaq.

On average, stocks traded on the Nasdaq exchange tend to exhibit approximately 35% greater volatility than stocks traded on the NYSE. As of 2014, the average five-minute price change in a Nasdaq stock was 6.1 cents, compared to 4.4 cents for stocks traded on the NYSE.

It is primarily the nature of the companies respectively listed on each exchange that largely accounts for the Nasdaq's greater volatility. The NYSE is home to many more well-established, blue-chip stocks that have offered a reasonable rate of return for decades. In contrast, the Nasdaq features significantly more technology and Internet stocks with high growth potential. Higher potential returns on equity are commonly accompanied by both higher volatility and higher risk.

The Wild, Wild East

The stock exchanges displaying the highest volatility over the past 20 years are in places such as Shanghai, Tokyo and Hong Kong. The Tokyo Stock Exchange's Nikkei Index, as recently as 2013, qualified as the single most volatile stock index among developed countries.

However, Tokyo is being challenged in volatility by China's burgeoning Shanghai Stock Exchange. The Shanghai Composite Index recently had an intraday swing between a 6% loss and a 1% gain. Over a two-week period, the Shanghai Index swings were larger than the total combined swings of all the other 70 stock indexes regularly tracked by major financial news organizations.

Increasing access to trading on the Hong Kong Exchange by mainland Chinese investors has led to increased volatility on that exchange as well.

India, Indonesia and Thailand are also among the top 50 most volatile stock markets as of 2014, a list that includes neither the NYSE nor the Nasdaq.

The most volatile stock exchange in the world in 2014, the Buenos Aires Stock Exchange in Argentina, also showed the highest returns for the year, at just over 100% on average.

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