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Non-Tech : Stocks 101 A Course For Beginners
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To: AugustWest who wrote (3)12/23/1998 8:25:00 AM
From: jbIII  Read Replies (1) of 15
 
AW,

I think that the bid/ask spread that is displayed is not a fixed range but is the range of the lowest bid and the highest ask of all the participating M&M's. If there are 10 M&M's for a stock, they are in competition with each other and their bid/ask will constantly change or update depending on the market. They are not all going to have the same bid or the same ask. When there is a lot of volume some may react faster than others and some may hold relatively constant. Likely there is no one M&M that covers the full range

So the trick is to have access to several M&M's and play them against each other and Never Ever place an At Market Order when there is a lot of activity in a stock. I think that this is why sometimes you see large spreads. If the price is going up and someone places an At market order, you can be sure that some M&M will raise his price above the current posted ASK and grab a sale. This will then be displayed as the current Ask or Last trade, If more people put in at market orders their price could also be higher. Same thing if people are selling when someone puts in an At Market sell order , they can get reemed also when a M&M grabs the trade below the last posted bid. This is not illegal , just ignorance on the customers part.

I was watching a junior mining stock I have a few weeks ago and the day opened at about $.40 and started moving up fast. Trades were going off at .8, .9 $1.0 or more and then I started noticing Asks at $2.00
while Bids were at $.30,.35. But inside this range there were many trades at the average level and it closed around $1.0.

Hope this helps, have a great holiday, Stayin home today don't have ice skates for wheels.

jb3



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