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Strategies & Market Trends : A Simple List of General Do's & Dont's of Trading:
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To: Arthur Tang who wrote (722)9/25/2000 5:14:20 AM
From: Arthur Tang   of 769
 
The ways of market making? Is it strictly supply and demand?

Most of us who have talked to specialists and market makers knew that daytrading is not market making. To do that job, market makers always ask the company for some stocks available to them to start a market. They then register with Nasdaq and proceed to print bid and ask offers. When their customers buy and sell then they move the offers according to supply and demand. When supply and demand dwindled down, they would move the offers according to greed and fear. That revives the market. But, they have to have cash and stock pool ready. The cash requirement limits the number of stocks they can handle at a time. So, they have to lineup with the sentiments on the street within a certain sector. That is why the whole street pulls back and/or have nice moves on a basket of stocks.

Now, when I survey the pink sheets stocks; there is a trend recently to accumulate at 6 cents and move to 12-13 cents without news. This could mean a market making effort by the largest online market makers is being established. Since most new investors prefer small stocks to wet their feet on the internet.

Is this healthy for Wall street? I should say so. The market makers hired daytraders to learn the business. Now, they are learning the real market making efforts. It will only maintain value in the equity field. But they also have to turn around most of the small companies. The responsibility will bring them infinite rewards. Good Luck to all investors. Things can only get better from now on.
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