Every share has a buyer?

Discussion in 'Trading' started by fh2000, Feb 28, 2007.

  1. I forgot - I don't trade stocks, so MM were not on my list! Thanks guys!
     
    #11     Feb 28, 2007
  2. Just goes to show how poor the information is on ET.... MARKET MAKERS DO NOT HAVE TO "MAKE A MARKET" They do not have to be anywhere near the bid/offer... it can be as wide as they want... or the inside is... Specialist DO NOT HAVE TO "TAKE THE RISK" they can let the book pair it off or wait for someone to come in before you get executed...
     
    #12     Feb 28, 2007
  3. Ahhh.. so why do we have the MM/specialist and a hydrid system at the NYSE then?
     
    #13     Feb 28, 2007
  4. But MM's and the specialist have to provide a even and "fair" market.. right?

    So did these guys lose a ton of money yesterday?...

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    also not every trade has a loser at the other end like most people tend to think.

    situation: trader "A" shorts 100 shares of yhoo at 25. A week later trader "B" buys the 100 shares that trader "A" covers from at 20.00. Another week passes and yhoo rises back to 25.00. Both make money
     
    #14     Feb 28, 2007
  5. oh...ok, I'm wrong.

    --

    Another thing that I never really got was how prices never trade sideways forever. I read in some book...probably elder, that said its the potential buyers/ sellers...the guys on the sideline that push a stock up/down but how can you measure something like that if they dont put in an order?... before an order is entered, they're invisable.
     
    #15     Feb 28, 2007
  6. EricP

    EricP

    Don't confuse yourself. Trader "A" covered his short by buying. When Trader "A" covered his short by completing a trade opposite Trader "B", Trader "B" had to be a SELLER, not a buyer. So, as the price went back to 25, Trader B lost the same $5 per share that Trader A profited during the drop. They did not both make money (although that would be nice if it were possible).
     
    #16     Feb 28, 2007
  7. But it could be also possible that trader B was selling his long position which he owned from 15, no?
     
    #17     Feb 28, 2007
  8. If there is nothing to pair it off with THEY DO HAVE TO TAKE THE RISK.

    http://www.sec.gov/answers/specialist.htm
     
    #18     Feb 28, 2007