This is the last MM question I'll answer here. The thread says MRV Communications so let's stay with that topic.
MM's can move the price down on low volume days to take out stops?
No.
I thought the MM set the bid and ask on Nasdaq stocks and thus, especially at the open, could take the price down quickly at least until buy orders started to pour in.
The MM is prevented from taking the stock anywhere. They are required to get on the other side of the public orders to buy or sell when there is no offsetting public order to sell or buy respectively. This is known as making a continuous market which we all want. They aren't required to bail the public out, but they must provide shares no greater than 1/4 point away from the last transaction. They can't ignore some booked orders except under certain unusual conditions like gaps. It is public market orders under panic which trips booked orders. If the order flow is market 500, and there is no order on book or in hand the MM is required to at least partially fill at no greater than 1/4 point away. Say the entire order is taken. Another market order to sell 100 comes in on the board. The MM is required to fill no greater than 1/4 point away from the last trade. Say a 2000 share order market to sell comes in, the MM has discretion to part fill no greater than 1/4 point away and the rest according to the booked orders and the MMs own assessment. The MM avoids filling the remainder say,1 point away, unless the stock is illiquid since that would invite scrutiny. Say the remainder goes at 5/8 away. C'est la vie. Next you hear the public complaining about backing away. The rules and the process are more complicated, but it isn't necessary to get into all of the details. If you depend upon fine execution, you must be on the floor or make the market yourself. Then you will see how fair it is and how the public action is of the lowest form of lunatic driven greed.
On a few occasions I have lost stocks when the price dipped sharply a couple of points to just below where I had set a stop loss order BUMMER!!!
Am I just being paranoid or is this kind of manipulation done by MM's or maybe big players?
You placed an order where you decided that if the stock reached there you wanted out. The stock reached there. Others, the public, thought the price where you wanted out was a bargain, so they went in and aggressively bought. They didn't agree with your theory of resistance level. They thought your resistance was support, so they bought and the stock ran back up. When the fool public is chasing stock the MM stays away. They only try to plug holes, if they want to stay in business.
I recommend that you stay away from illiquid stocks and go market. Since mostly you're making long decisions when you sell, sell market and sell it all right now. On the buy long action don't book below the market hoping to catch a dip. Say you want 1000 shares of XYZW because that's all the money your wife and teenager will let you have. Buy 200 market now. Then do nothing for some days maybe weeks. If the stock rises and everything is as good at least as it was when you bought the first 200, buy another 200 market. Try to buy at the day's top. Got that? That means you fall all over yourself fumbling to get on line in a panic you'll miss the market. You buy when it breaks out and by the time the order gets there the run is over and you're bagged. That's the first sign you're succeeding. Then do nothing for some days maybe weeks while the market crashes. Etc. The point here is that it doesn't matter what the market is doing or what you are doing, but you are requiring that your choice is performing or you won't. That way you keep the size of failure small and you make your great choices prove themselves. |
