Market Maker Tricks

Discussion in 'Order Execution' started by froggie, May 28, 2005.

  1. froggie


    Hi folks,

    Anyone in here know if the market makers are aware of and can distinguish between retail orders and institutional orders? I mean can they see if a retail trader is buying or selling? And do they see our account numbers when we place a trade? Answers to these will be very helpful. Also, does anyone know of any market maker tricks that we stock traders should be aware of?

  2. froggie


    No one knows any tricks:D ?
  3. Market makers buy when froggie is selling and sell when froggie is buying :D
  4. Brandonf

    Brandonf ET Sponsor

    The evil manipulators, they do all kinds of things. For example, when you download music from the web, they put spy wear on your computer so they know exactly what you are doing and where your stops are. Once there is a cluster of stops very close by they get the NSA to help them slow down the internet, maybe even crash it, and then they bring prices to the stops. Your stuck though coz of the internet stuff but prices keep going down. Once you are able to finally put your order in, scared and having lost several pounds and probably driven up the price of MO by 50 cents by all the cigs you have smoked, they BUY and call the people at CNBC to get them to help run it higher. This happens every hour of every day. It's a wonder any of us can make a nickle without such dirty trickery. :p :D

  5. I think Froggie has taken enough sh*t for asking this somewhat paranoid Q.

    I am not an expert in this, but AFAIK, the MMs/specs will know whether your order is retail or professional and the originating broker, but not your specific identity or account.
  6. :D That happened all the time with my stock-trading account at Datek!


  7. Banjo


  8. Fuck, I knew it.

  9. If you are a real savvy daytrader, you can use arbitrage to make use of the different prices offered by market makers.

    I have never done it, and I have heard its much more difficult to do it now that inefficiencies such as that are quickly corrected, so you are talking about a few seconds to act on it.

    Anyways, I think you are not that far off with your concern. I have heard others talk about market makers fucking around with the stock price and I think there is some truth to it.

    Think about this scenario (which is not that far off from reality!)

    A big holder of a stock decides to dump all of his holdings (say 5M shares, of the total 65M common out there)

    He wants to slowly release his shares to prevent the slobs like you and I from catching on and dumping our small positions (1K or so) as he unloades his.

    He is going to have the market maker continue to sell shares at the market in the hopes of getting as much as possible for his shares.

    If he just was like any of us slobs and put in a market order to sell 5M shares on a stock with only 65M total and average daily volume of say 300-400k, the stock would drop in HALF in a matter of minutes as the market maker certainly does not want to get stuck with that many shares.

    FYI: I know someone who worked for a market maker as a runner and he told me the market makers make zillions!

    And, trust me they are not making zillions on the small spread on each trade either! They control the market and the price!

    Just realize what is going on and adjust to it. Realize the market is not rationale and there are people screwing around all the time with the price.

  10. yes because you can see the counter party you just traded with from the clearing ticket... i think it depends on ur broker if this information is instatneous or not.

    btw depending on the market of the stock the MM do control the price
    #10     May 28, 2005