Market Makers STUPID?

Discussion in 'Trading' started by axeman, Nov 6, 2003.

  1. Are MM's stupid enough to show large size
    on the bid?

    Ive been watching a stock that im in, and this one MM
    keeps showing size on the bid, and is in fact really buying.

    He gets hits and just refills. I dont get it.

    Is this a case where an MM is working an order for
    someone else and just doesnt give a shit if he shows
    his hand and doesnt get the client a great price?

    Traders just keep leaning on him.

    Any ideas?


  2. Ebo


    Maybe he has Size for sale!

    Believe it or not there are BUY side traders that request him to be there for SIZE OUT LOUD for other reasons.
  3. Do you have any examples of these reasons?

    If he is in fact a big seller, and is supporting the stock at
    this price and driving it up, it must mean he believes that
    the number of shares he eats will be SMALL compared
    to the number of shares he will be able to dump at a higher
    price by "scaring" the price up, then unloading his OTHER
    shares AND the shares he ate at the lower price.



  4. Mecro


    It's called advertising.

    Or he needs to control certain trading range to screw traders or get some instititional blocks printed.


    If he's buying for an institution he may have been told to show the size.
  6. Cut the conspiracy theory BS.

    The MM could simply be showing a bid for an institution.
    No big deal.

  7. Why would an institution want to show size?
    Every little leach day trader will step in front and they
    will get a worse price. :confused:



  8. The mere fact that we're debating if someone is buying strongly or trying to fake strength tells you not to over analyze it. Without seeing the market depth, there's no telling what's real and what's a bluff. Sort of like playing poker.
  9. For some of these guys, getting the trade for size done quickly is more important that trying to skim a few pennies.
  10. Unless you see the MM chasing stock up, there's nothing wrong with showing size. How else is a size seller going to know there's a buyer?

    If you frontrun the guy, and he doesnt raise his bid, you lose and he gets his stock too. :p
    #10     Nov 6, 2003