posted
Guys, I'm new to this and have strangely made a bit of money. Question: Who are MM's and how do they affect the market?
Posts: 31 | From: California | Registered: Sep 2005
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posted
A "market maker" is a firm that stands ready to buy and sell a particular stock on a regular and continuous basis at a publicly quoted price. You'll most often hear about market makers in the context of the Nasdaq or other "over the counter" (OTC) markets. Market makers that stand ready to buy and sell stocks listed on an exchange, such as the New York Stock Exchange, are called "third market makers." Many OTC stocks have more than one market-maker.
Market-makers generally must be ready to buy and sell at least 100 shares of a stock they make a market in. As a result, a large order from an investor may have to be filled by a number of market-makers at potentially different prices.
To learn more about the basics of trade execution, you should read Trade Execution: What Every Investor Should Know.
posted
MM's are the enemy; their goal is to make you sell your shares, preferably for a loss. I see them as greedy scum bags: the dark side of the market: the nay sayers. However, you got to like them for the hundreds of percentage gain they regularly give pennies, which I wish I can catch more often. I don't care to give more details.
Posts: 1468 | Registered: Jul 2005
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posted
best way to learn about mms: 1. Get alphatrade for the free first month, maybe its 9.99 whatever 2. watch this board for a stock that is running - don't buy in 3. watch the L2 movement on that stock 4. See how they move around and learn the concept of the axe
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
play the mm game and you'll make money, they aren't always evil :-)
-------------------- Choosing individual stocks without any idea of what you're looking for (or without reliable information) is like running through a dynamite factory with a burning match. You may live, but your still an idiot. Posts: 5320 | From: Syracuse, NY | Registered: Apr 2005
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posted
I don't know if they are evil or the enemy. Because if the stock is going down from a bad stock or by MM pressure you should sell. Now greedy, I have to agree with that. But they are here to make money. And they make it going up or down. They are sort of like the house in Vegas. The house always wins. They make most of there money on the spread between bid (what you can sell at) and ask (what you can buy at).
Now you would think that if the stock was 1.00 bid with 1.01 ask or 2.00 bid with 2.01 ask that the MM makes the same amount because the spread is the same .01 but that would be wrong. They make twice as much on the 1.00 1.01. So you may ask why. Because the investor can buy twice as many shares at one dollar then two dollars so even thought the spread the same the number of shares bought increase with the decrease in pps.
Thats why the MM's like to see the pps drop. Because with the lower price then they hope to see higher volume. And the higher the volume the more money they make on the same spread. Thats why they like pennies. The volume is tremendous and what ever price brings the highest volume is were they like to see that price.
Of course saying that, bringing down the price isn't that easy and there is laws for them to follow. Now they tend to twist them a bit but still are watched fairly well. They do have tricks like trading between each other and signals for others to see where they should go. But it still comes down to volume. They don't want to kill a stock so bad that they don't trade. Also market pressure like oversold and overbought still play out too.
Well, if you really want to trade then Level II's are a must to see what the MM's are doing and were they stack up. If you remember that pinks are easily manipulated by many not just MM's and play the runs and don't hold long. Take profit whenever possible and never look back saying I could have made more because the next time you try and hold longer for that little more you will lose big time.
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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