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Microcap & Penny Stocks : PLFM - Undervalued with great potential -- Ignore unavailable to you. Want to Upgrade?

To: Makedacash who wrote (2122)	5/7/1998 12:10:00 PM
From: Michael Harb	Read Replies (1) \| Respond to of 9096

I'll step back a couple steps in case you're not familiar with MM's. The NYSE and AMEX operate what is called an auction market...Buyers and sellers trade directly with one another. The Nasdaq operates using market makers...They are middlemen. You sell to them and buy from them...Since the Nasdaq and OTC:BB have a lot of smaller cap stocks, the MM's provide liquidity to what would otherwise be an extremely volatile environment..It ensures that there is always someone willing to buy your share at a quoted price. The Nasdaq requires a minimum of 3 Market Making firms to make a market in any listed security...Usually there are more. Some of the bigger names can have up to 100. Market Makers compete with one another to make trades. Each market making firms quotes a spread. The highest bid, and lowest ask comprise the "inside spread" which is what you probably see. Here is an example: ALEX 1.00 MHMY 1.03 FAHN 1.00 CCCC 1.04 MHMY .98 ALEX 1.04 CCCC .95 FAHN 1.07 GVRC .94 GVRC 1.10 I made these numbers up... The spread you would see in yahoo and the like is 1.00 x 1.03... MHMY is currently on the ask at 1.03. That is what you would be able to buy at..When he gets done selling shares at 1.03, he will likely move off the ask and adjust his quote from .98 x 1.03 to 1.00 x 1.10 or something similar...that would make the new spread 1.00 x 1.04... and so on... mike