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Non-Tech : Market Makers - What They Do and How They Do It
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To: Richard L. Williams who wrote (132)2/9/1999 10:33:00 PM
From: KFE  Read Replies (2) of 429
 
Richard,
I will try to answer some of your questions from post# 132.

Buy/Sell ratio- for every buyer there is a seller. Because a trade takes place at the bid or asked doesn't mean it was a sell or a buy.

Market Makers taking large short position in a stock- they are not in business to make money that way. They make money by utilizing the spread. Any trader finishing the day with a large position either way would probably not have a job the next day. Volume of trading is what they want and they will use tricks to help create it. This is not to say that they won't do everything in their power to move a stock INTRADAY in a direction beneficial to them.

Market Makers borrow from customer's cash accounts to cover short positions- they better not! This is illegal.

Market Makers don't care about fundamentals- 100% correct. I have checked many market makers DD files and they usually don't consist of more than just maybe the most recent annual report.

BB stocks and firms that trade them- I can't emphasize enough the dangers here. If you jump into a snake pit you are going to get bit. If you must trade these stocks, having a large tube of lubricant handy is a must.

Hope I helped some.
Ken
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