A couple of things with regards to your post.
First, on my quote system, a size of 100 means one hundred shares, not ten thousand shares. The size does not have a multiplier. For example, a size of 1000 means one thousand shares and a size of 10000 means ten thousand. Did you mean 100 or 10000?
Second, I'm sure that you mean well but I question the validity of your claim that INCA is manipulating stocks with the size. If a market maker puts up an offer for 10000 shares, he is saying "You can buy up to 10000 shares from me without moving my offer." What happens if a big buyer calls his bluff and buys all that stock? Then he would be short 10,000 shares with a big buyer up his rear end.
Third, market makers are in competition with each other rather than in cahoots with each other. A market maker is nothing more than a trader like you or me. Granted they can buy at the bid and sell at the offer, but they don't have any more control over the price of a stock than anybody else.
If a market maker shows a size of 10000 shares on either the bid or offer, he must be working an order for a customer. I have noticed that market makers sometimes show their size and sometimes don't. For example, let's say that a market maker receives an order to sell 20,000 shares of XYZ at 20 1/2. Sometimes they will show the size and sometimes they will only show 1000 and refresh their offer whenever somebody buys from them. I have mixed feelings about whether it is fair for a market maker to not show his true size. On one hand, this keeps the market in balance and doesn't cause fear or greed in any particular direction. On the other hand, I'd like to know how much stock somebody is trying to buy or sell. In most cases, I'd be willing to bet that a market maker doesn't show his entire size when he is working a large customer order because he doesn't want to disrupt the market. If a market maker has a limit order to sell 20,000 shares of stock, depending on the bid size, he would likely not get a fill for his customer if he showed the entire order at once. This would probably scare away buyers and cause the stock to down tick.
One more example...sometimes a stock has a size of say 1000 x 1000 and a market maker on the bid will show up with a size of 5000. I have seen where the market maker on the offer will change his size to 5000 because he actually had more to sell but didn't want to show it with a bid size of only 1000. A market maker has two goals. One is to get a fill for his customers' orders and the other is to make a little money on the spread. I disagree that they are evil beings who are out to get you. In many cases, they help you get a fill at your price.
Best of luck to everyone,
Dan |
