Note how from mid December 1997 to Late April of 1998 the price hoved up and down over and over again between 3 cents and 11 cents. And then one day it shot up to 60 cents.
It isn't Panamerican, but the MM working it are some of the same that are working PanAmerican now.
The stock was GLOW, global games.
If you are wondering why the roller coster ride, it is simple...
Market Makers usually only make money by collecting the difference on the spread.
If continuous buying is coming in, obviously they raise the price. If the buying slows, or stops, they start to drop the bid. Even short the sales near the top, in anticipation of the downtrend coming.
Remember they see all buy and sell orders that are coming in.
It is in a MM best interest to keep the volume coming in. They don't care if it is going up, or going down, they can make money both ways.
Best way to prevent massive price slides....
don't sell at low prices.
A market maker needs to buy shares from YOU to sell to someone else. If he can't buy from you or anyone to fill the order, what does he do...
raises the bid to perhaps entice you to sell, or ....naked short...
How many times have you seen the ask at a certain price, so you put in an order to buy at the ask, but yet, it doesn't fill.
Simple answer, they couldn't find a seller to get shares for you, and they didn't want to short the shares to you(naked).
So what happens...you put the order in at 10 cents, and the bid is 9. Your order sits there not filling. Then all of a suddent the bid raises to 11 cents and the ask jumps to 13 cents. so you put in an order to buy at 13 cents..still no fill. but you see an order go buy for 11 cents, and a fill a minute later for 13 cents.But yours doesn't fill.
then the bid raises to 13 cents and the ask raises to 15 cents.and you don't fill? You baffled. You call up your broker and say "hey what are you guys doing, I've had orders in at the ask and it isn't filling" They give you a lame speech about the OTC being a MM run system and orders are not guaranteed to fill blah blah (mostly because the retail order takers (brokers ) for the most part don't know how the market really works.
(most brokers are given a computer screen and a mirror when they get their jobs. A screen to quote prices, and a mirror to watch them starve to death)
so you see the ask is at 15 cents. "Fine you say. put in an order for 16 cents."
Next thing you know, you fill at 16 cents . (coincidently, the bid was raised to 15 cents prior to your fill, and the ask became 16 as your order filled.
This is what happens to a stock when it is going up.
When It is dropping, it is the opposite. Lots of sell orders are lined up, but not enough buy orders.
So what does a MM do to entice someone to buy, when no one is looking to buy...
Drop the ask (and the bid with it)
God help anyone with a sell order in that is a market order.(or a buy order at market)
that is the world of OTC BB.
now how will Isider Trading help with this?
First, people will be direct to the floor. With Nasdaq, level ii, they'll know who is working the stock, all the different prices offered and asked.
They'll be able to put in a bid at the price they want, without having to get a broker to put the sell or buy for them.
They'll be able to actively go in and grab some of the sells coming in that they would normally miss because they are two steps removed with conventional brokers.
It will be so much easier for people to see what the trend is in the stock. |
