Stocks that are not listed on a traditional exchange but trade via the NASDAQ system are handled with a very different mechanism. There is no centralized exchange, but there is a system of competing market makers who post quotes on NASDAQ stocks. The spreads between the bid and ask prices tend to be much larger for NASDAQ stocks than for comparable exchange-listed stocks, and the number of shares that the dealers quote are usually not representative of their willingness to trade. As with exchange-listed stocks, your broker can tell you what the best quotes are at any moment. If you place a market order, you will probably get the order filled at the current bid or ask quote. Limit orders on NASDAQ are handled very differently from limit orders on the NYSE or Amex. Most likely, your limit order will stay with your brokerage firm and only be executed if the market makers' quotes change to meet your order. For example, suppose that you are interested in purchasing a NASDAQ-traded stock whose best displayed quotes are a bid of $8 and an offer of $8.75. If you place a limit buy order at $8.25, your order probably will not be filled until one of the market makers decreases their ask quote from $8.75 to $8.25. Your broker is under no obligation to show your order outside the firm. Many of the larger brokerage firms maintain their own internal limit order books, but there is no formal limit order book like the ones the exchanges maintain for exchange-listed stocks. Thus, your order to purchase at $8.25 may go unfilled even if there is an order at another brokerage firm to sell at $8.25. Unlike the NYSE, the market makers may trade ahead of your limit order even if you placed your order first. It is also important to think about what might happen if your limit order is not filled within a reasonable amount of time, and you still want to trade the stock. If you think that the stock is going to make a major move, then it may move before your limit order gets filled. On the other hand, if you are not expecting the stock to go anywhere soon, it may not run away from you. If you really want to get the trade done, you need to consider this risk that the stock may run away from you.

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