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Non-Tech : Meet Gene, a NASDAQ Market Maker -- Ignore unavailable to you. Want to Upgrade?

To: gene_the_mm who wrote (553)	8/16/2000 10:55:01 PM
From: ~digs	Read Replies (2) \| Respond to of 1426

Gene, To clarify my question... Let me preface by saying that I'm mostly a bottom fisher going long on 'illiquid' stocks... those with a float of less than 10 million for example. I am not a level II trader and my knowledge of a market maker's job is somewhat limited. Quite often I will see price spikes below current support in a stock's chart just prior to a reversal and break in trend (I find this to be most prevalent in the 60 minute window, but it can be found in the daily chart as well) Many traders attribute this to 'the market maker taking out stops.' Which implies that as a market maker, you saw the stops on your computer and went for them in an effort to increase your inventory prior to an expected run. Often the mini-slide starts with low volume and is capitulated with a larger block trade. Certain upper echelon online brokers are now offering a few types of what I'd call 'value added order entry features'... (most of whom are affiliated with either realtick or cyberX, as far as i can tell). Known as either autonomous stops or conditional orders, these entry systems allow you to set dynamic stops that are not seen by an MM until the actual order is ready to get filled. I find that this sort of platform is ideal for position traders. It helps eliminate emotion in your buy/sell decisions and gives you the increased freedom to set stops with less fear about getting 'taken out' just prior to a big move. The new features some brokers are offering go on to include something called single-instrument or cross instrument conditional orders. Which I guess means that theoretically you could, for instance, set a buy stop order on a 60 Min MACD XO if it is accompanied by abnormal volume. Maybe I'm ahead of myself a bit there, but I suppose what it amounts to is program trading. My question to you is: What's your take on all this (in general)? and, Can you describe a real or hypothetical situation in which you 'cleared out the stops' in the hopes of increasing your inventory prior to an expected up-leg in price? How does it go? Were you met with fellow bidders at your side while attempting to fill stop losses? Thanks for your insight, Dave