Konrad, it is nice you have so many ideas how things should work, but I'm trying to tell you how they do work.
Taking your example, several points. (i) << do you think the soes bandits consider it beneath them to deal in 1000 lots?>> again, as I just posted [and you did not read?] 1000 shares is the maximum limit possible for SOES trades [which is Small Order Execution System], nobody cares whether they consider it "beneath them". (ii) Are you suggesting thinly capitalized kids (SOES bandits), if in their mind at all, should short a 1,000,000 shares of NASDQ stock for no other reason but they think MMs post bid/ask too high? That's not what they do - they are extremely short term traders, they cause few-minutes fluctuations, but are not crasy enough to stay heavily shorted for days and months just to prove "MMs are wrong". After all, they just trade their own (or even borrowed) money, just like you. If you don't do it, why should they? (iii) What does cost of round trip trades has to do with anything? Do you think if you buy/sell stock in one day, you're going to affect its long-term price price?
Informationless short-term trading by its nature, being round trips, does not set the equlibrium price if done without intent to manipulate the price. On the other hand, it is official and publicly acknowledged goal of NYSE specialists and NASD market makers "to support" prices, "to provide orderly markets", etc. They do their short term trading in such a way as to drive prices up, most of the time. It is their job to do this, this is the reason they are allowed to make markets. If they fail to do this, they are subject to fines, investigations, and other penalties.
Try to read and understand what people say, before you agrue.
Joe |
