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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: Michael Berkel who wrote (20936)12/30/1998 7:26:00 PM
From: gbh   of 120523
 
The beauty of NITE is that Marketmakers ALWAYS make money irrespective of the market direction.

Ahh, if only it were that easy. We could just become marketmakers, and live happily ever after. But this statement is completely inaccurate.

MMs put their own capital at risk (just like you and I).

If supply equaled demand, then yes, the MM would just buy my stock at the bid, and sell it to you at the ask, and pocket the difference.

But supply rarely equals demand, and MMs are often forced (required) to short sell stock to satisfy demand, or buy stock from a seller for which there is no real buyer.

Companies like NITE know how to manage this risk (and some would say, manipulate markets) to make this a profitable business, but it is by no means the slam dunk that you imply.

Gary
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