June 11,1999 - When you enter an order to buy or sell a stock. What are the bid and ask, and what do those numbers mean? One, the bid, is what you need to know when you arc selling a stock. The other, the ask (or offer) is what you need to know when you're buying. But you also need to know those numbers. Here's how it works:

If an investor looks at a computer screen for a quote on the stock of XYZ, it might look something like this: Last: 20 Bid: 20 Ask: 20 1/4 BSize: 12 ASize: 5 The translation: the stock of XYZ is being bid at $20 a share and offered at $20 1/4 per share. There are 1200 shares bid for and 500 shares offered. If you are looking to sell stock, now you know there is a firm willing to pay (that's the bid side of the market) $20 for your stock, and that you could sell at least 1200 shares of stock at that price and the quantity of shares at that price.

If you are looking to buy XYZ stock, you would have to pay $20.25 and could buy at least 500 shares of stock. Again, there are two parts to the ask side of the market: the price at which you can buy stock and the amount of stock you can buy.

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Whenever you enter an online trade, a "live" quote will be shown so you'll know where the stock is trading and what to expect if you buy or sell your stock. However, be aware that the stock can move very fast and that you may not get the price shown on your screen. That's because by the time your order is sent to the floor to be executed, the bid and ask max, have changed because there was an order that came in ahead of yours and wiped out the bid or offer. Then the stock moves to a new level and the bid and ask will be different from what your screen showed when you entered the order. This doesn't happen very often, but it does happen. And when investors enter their market orders (meaning they will buy or sell stock at the market, no matter where the market for the stock is), look at the bid or ask, and then see their execution price is different from the stock prices they saw, they have to realize that stocks can be very dynamic, sometimes changing just as their orders are entered.

Another bit of jargon: the words ask and offer are the same thing. This is the side of the market where investors can buy stock So when you hear: Where's the stock offered? Or what's the "ask" on the stock? They're both asking the same thing.

The size of the market can help you decide on the timing of your purchase or the price. For example, if good old XYZ is trading at $20, and the bid size for the stock is 200 and the offer size is 5, that means there are 20,000 shares bid for and only 500 for sale (when you see the amount of stock bid for or offered, just multiply it by 100 for the actual amount of stock. If you see 999, that means there are at least 100,000 shares). If you're looking to buy the stock, you might want to get your order in quickly because if the buyer of the 20,000 shares get excited and starts to buy all the stock around, no matter what the

price, it will push up the price. On the other side of the trade, if you are a seller, you may want to wait a little while because that kind of size to buy suggests that maybe the price will be moving up if the buyer doesn't have patience and wants that XYZ stock NOW.

Of course, the buyer may not move from the $20 price, or may find another stock that is more attractive and buy that one instead. So you can't know with certainty what will happen with the stock's price. But then, except for death and taxes, certainty just isn't part of life or investing.

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There are some basic rules that need to be followed in order to place stop and stop-limit orders. Stop and stop-limit orders must be placed above or below the current bid or ask.

EX. Buy 100 AOL 100 STP. The current ASK on AOL must be below 100.

EX. Sell 100 MSFT 95 STPLMT. The current BID on MFST must be above 95.

Stop orders will become MKT orders when they arc triggered.

Stop-Limit orders will become LMT orders when they are triggered. A limit order will be created at the STPLMT price.

Stop orders placed on listed vs. OTC securities are handled differently. Stop orders on listed securities are triggered by an actual trade occurring at the stop price. Stop orders on OTC securities are triggered by the bid or ask reaching the stop price.

Note: Stop orders may NOT be placed on Pink Sheet or Bulletin Board (BB) stocks, as all quotes are displayed as "subject quotes".

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In light of recent record volume trading days on both the NYSE and NASDAQ exchanges we felt it was a good time to review Fast Market trading rules and procedures. It is important to realize what is actually happening when fast market conditions occur.

A fast market is due to extremely high order volume on a particular issue or sector. Market makers are not able to handle the volume on these issues in the traditional manner. Automated systems are shut off on particular issues trading in a fast market conditions and are executed on a manual basis. The quotes that are displayed may or may not be accurate, due to the abnormally high volume.

These two factors can lead to lengthy delays in receiving executions. Canceling or Cancel/Rep lacing an order does not ensure that the order will be canceled or changed as requested. Because of the high volume the cancels/changes that are submitted have difficulty catching up with the original order, thus frequently making them "too late to change/cancel." Fast market orders may fill at prices dramatically different from the quote at the time the order was submitted. If you feel that your order may be executed it is better to contact customer service rather than continue to submit changes/cancels. Due to the heavy volume during these periods executions are often delayed and submitting changes only exacerbates the problem.

It is important to protect yourself when fast market trading conditions exist. You can do this by placing "limit" orders rather than "market" orders. This will protect you from fast moving stock prices and ensure your execution price. Lastly and most importantly, Be Patient! Everyone is working as fast as possible to execute every order as soon as possible.

For more information regarding this and other relevant issues you may visit the NASD web site at www.nasdr.com.

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Nothing herein is to be construed as a solicitation or any transaction. The information presented has been obtained from sources considered to be reliable, but it is not purported to be complete or without error. Freedom Investments, Inc. and Fahnestock & Co. Inc. and/or the officers and directors, and/or members of their families, may at times have positions in any securities mentioned. All commissions and fees are subject to change with notice.