MARKET MAKERS STRATEGIES: Newer investors should read this 10 times!
This is being posted around; read the last 2 paragraphs very very carefully. Patience really works. My favorite personal example of patient investing for maximum return is NUKE, which was run down by impatient traders and savvy MM's from $1.25 to 11 cents and then it ran up to almost $6.00, for a 5000% gain, but there are many others like WLGS which ran from 20 cents to $7.00, a 3500% gain. If only I was smart enough at the time to hold that long. I have learned too.
Playing momos can work for some, too, if you are really good at it. But this strategy is best for most people.
AGAIN, READ THE LAST TWO PARAGRAPHS ESPECIALLY! It may be the key to successful investing. If you haven't made at least a 300% return since Dec, 1999, you aren't buying and holding the right companies. Late Dec-April is the easiest time to make money in the OTC/BB.
***
By: MIJ
Reply To: 113506 by timis Thursday, 16 Mar 2000 at 10:40 AM EST
Post # of 114809
PLEASE READ..STUDY the following lesson in OTCBB trading!
When MMs get caught unaware - when big news hits for an OTC
stock - they get flooded with BUY orders. Now MMs make the
most $ when the buy and sell orders are EQUAL and MANY - so
they get a piece of each one and do not go SHORT. MMs do go
long, but not really that long - they are short term traders. They will
buy at what they think is cheap, sell for what they think is a good
gain, and then short again, drive the price down, cover, and go
LONG again.....
So - when MMs get caught in a FLURRY of orders from investors
to BUY stock, they fill some and then to protect themselves, they
RAISE THE ASK. Ever noticed that it is hard to fill in a moving
market?? That is b/c the MMs do NOT want to fill you until the
BUYING STOPS - they HAVE to fill some, b/c they HAVE to
make a market. But they will fill as little as they can get away with
filling until they get a hold of the stock again - and that happens
when the price rides up fast and furious. Then, many buyers start
to say "well, I'm not gonna chase THIS much - I'll wait for the
pullback and get it then". THe buying slows down. Of course,
some people still buy - and some, more foolish people, have
placed MARKET orders in a fast moving OTC stock. That is
EASY MONEY for an MM, and when they see a string of market
orders, their eyes light up.
What they do is HOLD the Market order - sometimes for 10-15
minutes - all the while raising the ASK with as little order filling at
the ask as they can get away with - and raise to where they think
there will be some resistance. Then, they fill a TON of market
orders at a certain price - but they DO NOT move the ASK up.
They try like hell to absorb the buying flurry - and if they are
successful, buying starts to taper. Then, they will close the
spread to entice sellers - all the while NOT raising the ASK. A
few sells come thru, and then they try to trigger some more by
BUYING 100 share lots at the bid - WHICH LOOKS LIKE
SELLING TO THE PUBLIC. THe public and traders think the run
is over, and they start to sell - of course, MMs then do the reverse
- they DROP the BID/ASK and try to fill as few orders on the BID
as possible until they can walk it down to COVER
THEMSELVES!! Then all the orders to SELL at market go thru -
often at a SUPPORT LEVEL. Once the MMs get a few shares
back and decrease their short position (they may actually even
try to go LONG since they know the stock is in a rally), they move
it back up, hoping to induce PANIC BUYING from all of those
who BOUGHT at the TOP and SOLD in a panic when the stock
price dropped immediately after they bought...
MMs are sneaky XXXXX. Know their games. Know what
they are trying to do - that is, make $ at YOUR EXPENSE.
Making a market for them is secondary to making $ - always
remember that...
How can you beat them at their own game?? Simple - BUY
stocks with EXCELLENT management, a unique and scalable
product, and buy them when others either are panicked or are
unaware of the potential. Then, hold them thru the frenzy. The
ups, the downs, the non-action - just hold - and reevaluate
management's ability to execute their business plan at certain
key points - quarterly. Do not sell when the stock drops on no
news if you believe in the fundamentals and the ability of
management to execute. IF you need to sell, sell into strength. IF
you do not need to sell - just hold LONG - by that I mean
YEARS....
MMs think, and rightly so, that most people who buy OTC stocks
are not LONG TERM INVESTORS. They think they are here for a
quick buck, and most are - that is why MMs are so successful at
manipulating the stock and scaring "investors". If one really goes
LONG, that throws the MMs off. If the float is whittled away by real
long term investors, the MMs have less leeway to play their
games. Then they HAVE to make a more fair market, and they
HATE that... |
