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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Hally who wrote (3830)	2/25/1999 11:07:00 AM
From: Rande Is	Read Replies (1) \| Respond to of 57584

Yes, Hally. . .the difference is in the bid and the ask. Don't watch the LAST trade. It makes little difference what the last trade was or what percentage from yesterday's close that was. Rather watch the BID and the ASK. If a stock has a bid of 2 and ask of 2.25 and the last trade of the day is on the bid, then it closes at 2. The next day, the bid and ask remain the same, but someone buys 100 shares at the ask of 2.25. The last trade shows the stock has "increased by 12.5 percent" when in reality NOTHING has changed. You can STILL buy at 2.25 and sell at 2.00. The thing to concentrate on most, is the BID [after you have bought]. You buy at 2.00 and the stock moves up to 2.00 X 2.25, then you can now sell for what you paid. [tho sometimes you can sell between the bid and ask, but that is another story.] In this example, the price has moved up, but you still can't make any money. . .the difference between the bid and ask is called the spread. And this is where the market makers and brokers make their money. It means that. .for you to MAKE money on your purchase, that stock in the example must rise to say 2.25 X 2.50. Here the bid is a quarter higher than what you paid. That is all you need concern yourself with. . and avoid looking at the "change." It will do nothing but tease you. Also, same thing happens in reverse. Last trade is buy, next day first trade is sell. . .and it LOOKS like stock is going down, when in reality it has not moved at all. You really need to read some books on trading to get this info. . . I have a link for you. . . I will post later. Rande Is Rande Is