Market Makers

Discussion in 'Trading' started by quin8670, Sep 13, 2007.

  1. In a stock that does pretty high volume such as PG how much of the volume would be attributed to the Market Maker or if there isn't a market maker the big player/players in the stock. How many shares is a typical market maker in a large cap stock allowed to hold intraday?
  2. PG is a listed big board stock so its a little different. There is no rule on how much they're allowed to hold and mm's generally dont trade with each other.
  3. But how much do they hold? Like are we talking millions of shares, hundreds of thousands, ten of thousands?

    So you are saying there is usually only one big player on a listed big board stock?
  4. Too much typing for an adequate answer.

    1. First make a distinction between a specialist and a market maker.

    2 He can be short against a core long inventory posture. In fact several times a day.

    3. Not all NYSE transactions are on the tape.

    4 Intra-day highs and lows are where he puts on the brakes.

    5. He of course opens the stock. Thrives on ALIBIS. In theory to clean out the most open orders. The proverbial fair and orderly market. Gaps (up or down) are as he moves away from his basis. A gap can clean out a lot of stock with the flick of the wrist. Multiply the total # outstanding by a simple 25 cent gap to see the magnitude.

    The open is the ONE price point that all willing participants "get". This leads to amateur hour.

    6. Not all transactions are at the prevailing price. Negotiated blocks with concessions. Blocks are consulted with the ax for depth of the book before they're ever worked. Working is where the retail investor/trader plays A role.

    7. A cluster of blocks is often the boundary to a swing move.

    8. Commonsense would dictate he'd have MORE inventory as a dividend is paid. Many insititutions also trade for dividend capture.

    9. IF I had a daughter, I'd want her to marry a specialist.

    10. PG has A specialist and market makers (regionals and any wire house, say GSCO that has a large pressing order---on brief occasions, "the ax" ). The former is the kingpin.

    11. Specialists have been exempt from Fed Regs T and U since 1949 (after 15 years of lobbying). Ushered in the 1949-1966 secular bull. Puts many arrows in their quiver. 20 to 1 leverage is just one whereas a pattern day trader gets 4 to 1 + SMA
  5. The specialist firms have been getting killed for 5 to 7 years now. Many firms have simply gotten out of the business
  6. Golly!

    Yep decimalization has just RAVAGED the biz. And those damn ECN's keep carving off more biz. Afterall, retail is the lifeblood.

    Pssst, you don't even know WHO your enemies are, do ya?

    Tell me, which story do you like better?:

    1. Lil' Bo Beep

    2. Johnny Appleseed

    I'll wait for your answer, but not necessarily on the edge of my chair.

    Oh one more thing. WHat the hell are we gonna do IF they ALL simply go out of business?
  7. rosy2


    same thing we do now. place orders and get matched if possible or have our order show up on everyones screen as the best bid or offer.
  8. I think you may have missed the point. Besides tongue in cheek toward their demise, retail, direct retail, is a sliver of the entire scenario. In some cases, a nusance.

    70% of NYSE volume is program trading. For the most part indiscriminate. Most ownership of the floating supply is institutional. The majority of aggregate outstanding doesn't float. Pensions, insurance companies, mutual funds and 401-K's. The last quite passive.

    Everyone's screen? You mean we "all" play with cards face out? What a wonderful world. In harmony. Kinda makes ya wanna hold hands.

    Lastly, as for nusances, a little hint from Hattie, odd lots virtually always fill FIRST. Ax wants them off the BOOK. Combines to arrive at round lots. Comes in handy when you want out.
  9. rosy2


    i wasnt referring to retail. i just dont see the point to a designated stock market maker. I or any firm can place(or cancel) better bids/offers essentially becoming a market maker.
  10. sure in an orderly market, but when the shit hits the fan you're nowhere to be seen and you're not making 1000 up markets.

    Not to mention your orders are all involved in payment for order flow deals and soft money for order flow deals which you never get a piece of.
    #10     Sep 14, 2007