<<The trades you see on the time and sales in excess of what the MM's have posted are trades being done internally from customer to brokers.>>
That is not entirely true. Although I am sure that is part of the story, there is more to it than that. I have had to work orders in excess of 100,000 shares in low priced stocks before.
For example, let's say I am buying 100,000 shares of XYZ through a market maker in a stock. I am not going to tell my market maker how much I am buying. I will simply tell him to sit there and let me know what he can get. We are showing 1000 on the bid, but we are taking all orders. He will call every 10,000 shares and ask if we are staying on the bid.
Often the market maker himself doesn't know how much he is really buying. The brokers behind him are not telling him what they have because their own market maker would try to screw them out of 1/32 of a point. Think about it, on 100,000 shares 1/32 of a point is $3,000. These guys play so many games that it isn't worth the effort to follow them.
If you want the best price and it is 1000 shares or less, sit on the bid and let the market come to you at a price you are comfortable with. You can only lose that fraction of a point when placing a market order. If daytrading though, if you wait on the bid or offer, once you get hit, the market might keep going right thru you.
Jay |
