Home > Technical Topics > Order Execution > do market makers just take price in the direction they want?

do market makers just take price in the direction they want?

  1. When there are orders on both sides of price why would it go one way more than another?

    I've never seen a setting where the orders looked like this: Untitled.png
    in this environment obviously price would go up.

    Perhaps mapping it out on the chart with something like jigsaw would provide insights.
     
  2. Why?
     
  3. If i hit the bid, price would go down real fast ;)
     
  4. "do market makers just take price in the direction they want?"

    It ain't me. :cool:


    (But FWIW, what you've picked up on here has been a reliable 2-3 minute indicator for a good couple of years. I don't know how it's not better recognized. I've touted it, at least. :rolleyes:)
     
  5. I see bids with 0 as size... why would it go up?

    I would say... if there's more volume on the offer, it's more likely that the price will go down in the near/immediate future.

    But that doesn't have anything to do with market makers, since they are usually quoting in similar size on the bid and offer...
     
  6. It's institutional hedging, so it's counter-market.
     
  7. Wut o_O
     
  8. in this environment obviously price would go sideway
    because most of the traders are sleeping / having lunch.
     
  9. Do you want me to hit google for you?
    You've got this, Jack.
     
  10. In this case there are no buyers, that means sellers control the market, that means price will go up.

    Put another way, the market makers have no lower orders to do anything with, so they have to use the higher orders.
     
  11. This is what I want to talk about next.
     
  12. No. This is something I hear The Bozos Of Marketdom opine about all the time: "Oh! The Bulls were in control, today! Drove the prices up!"
    No.
    No, no, no and NO.
    If the bulls were in control, they would withdraw from the market, leaving any sellers to "chase the bid" (being, of course, a well-known phrase by those WHO ACTUALLY TRADE). Same with bears: if bears were in control of a market, they would pull their offers up up up, and let buyers chase them.

    If you're in *control*, you *don't* act to hurt your own interests. :banghead:
     
  13. There is a tiny supply of graphics processing units on the market now because all the ethereum miners are buying them to generate profits.

    In this case the sellers are in control and they set the price because everyone wants one. A $400 item is now like $800. Price goes up.

    Is my logic here wrong?
     

  14. Nope. They "withdraw" their product at $400, and raise it to $425 -- no, $510 -- no, $675 -- "Too late!" $800. Same a trader's price ladder.

    (Any willing) Buyers are chasing the offer.
     
  15. It's all semantics.

    If I'm long, I'd be bullish for whatever timeframe... but I'm basically a seller at a higher price. I'm not bearish though... since I'm long, but I definitely am a seller.

    And of course I'd like other buyers to chase bids up... depending on circumstances I might pull my offer up to higher levels as well.

    So, IMO bulls run up the price by having latecomers pay up higher. If I'm bearish, I might wait to see what price action is happening, and offering at a higher price... so also bears have the price run up if they would look at what's happening....

    Semantics...
     
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  17. Tommy-boy ;)

    You don't really want me to explain the word semantics, do you? :D
     
  18. Does that mean nope I'm not right?
     
  19. Who says market makers have to "do anything with" resting orders from non-market makers?
     
  20. Maybe I don't get what market makers do, then.

    Bump for replies to the question.
     
  21. The thing is there are multiple market makers that don't necessarly agree with each other.
    the DOM will give you no valuable info
     
  22. At a basic level, they're always there with a quote to buy from potential sellers and sell to potential buyers. To compensate them for this, they buy at a slightly lower price then they sell. Ideally if you're a market maker the market never moves suddenly and you just slightly adjust your bid and ask prices if you get imbalanced on one side or the other. Obviously it doesn't always work this way and the market moves for and against you, but ideally the majority of your profits came from the buying at a slightly lower price than you're selling all day long.

    For a good idea of what the world looks like without market makers, take a look at single stock futures. You have no idea where the current market is, most symbols have no orders so you would have to place an order yourself and constantly adjust it as the underlying moves until someone ambles along who wants to take the other side of your trade. The result, near zero volume and a failed market.