A Simple List of General Do's & Dont's of Trading: Message Board

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Strategies & Market Trends : A Simple List of General Do's & Dont's of Trading:

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From: Arthur Tang	10/13/2006 5:32:09 AM
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In an orderly market, each trade goes up or down by a penney. One million share trade is the same as one hundred share trade in theory. The old ways of market makers use distribution of round lots to move prices. Every time a recommendation is made, the share prices move. Today with discount brokerages, trading is done by computers; lot size did not matter as much. Some times larger trades hanging may effect price quotes though. On large trades in the old days, market makers ask a lot of questions before they quote a price, so that they are not caught unaware of rumors or fundamentals. Wall street has to change at the full service brokerages to distribute and help their accounts grow. Also have more conservative investment strategies of having cash reserves in each account. The problems of liquidity on Wall street is important. Merger and Acquisitions often use cash buyout which makes Wall street liquid. Market makers can then have balanced stock pool and cash pool. Instead of all cash and borrow stocks from the full service brokerages that they have to cover. Stock prices will then be more dynamic; not suppressed by borrowed stock costs.

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