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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Mark Davis who wrote (4624)	10/3/1999 11:18:00 PM
From: E. Davies	Read Replies (2) \| Respond to of 18137

If the MM's go away completely, you won't want to be long and staring at the bottomless pit left on the bid If the MM's went away big money traders would step in and partially fill the void. There is always money to be made buying at bid and selling at ask. The only difference would be that all the offers out there in public view would be real. The single biggest difference between a MM and the rest of us is that the MM is not required to actually fill whatever promise he makes. I see many times when MM interference in the natural process of the market actually increases volitiliy. The MM will sit with his bid at say 38 1/2 while the rest of the bids start falling away. Of course he doesnt actually fill many orders at that price (if any). Everyone sees that the only choice is to hit the MM with a sell order @38 1/2 and hope or bail on ISLD at 37 5/8. All this does is increase the intensity of the selling, knowing its now or never. Suddenly the MM pulls away and the bid drops 3/4 of a point. This increases the panic further, accelerating the selling even more. Repeat. Eric

To: Mark Davis who wrote (4624)	10/4/1999
From: marketbrief.com	Read Replies (1) \| Respond to of 18137

hi mark, i agree completely... I have never been "down" on the role that the market maker plays and often feel sorry for them (oh so briefly) when I see something screaming or crashing; I'm the last guy who would like to see the market makers "go away"... My comments really had to do with the proliferation of ECNs and how the market has become more fragmented, and in many ways less fair, than it used to be. Having a truly unified exchange would eliminate many of the pricing inefficiencies that now exist (and that quick dudes like Carl and KM exploit). ~Smart$