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Strategies & Market Trends : A Simple List of General Do's & Dont's of Trading: -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (722)	9/25/2000 5:14:20 AM
From: Arthur Tang	Respond to of 769

The ways of market making? Is it strictly supply and demand? Most of us who have talked to specialists and market makers knew that daytrading is not market making. To do that job, market makers always ask the company for some stocks available to them to start a market. They then register with Nasdaq and proceed to print bid and ask offers. When their customers buy and sell then they move the offers according to supply and demand. When supply and demand dwindled down, they would move the offers according to greed and fear. That revives the market. But, they have to have cash and stock pool ready. The cash requirement limits the number of stocks they can handle at a time. So, they have to lineup with the sentiments on the street within a certain sector. That is why the whole street pulls back and/or have nice moves on a basket of stocks. Now, when I survey the pink sheets stocks; there is a trend recently to accumulate at 6 cents and move to 12-13 cents without news. This could mean a market making effort by the largest online market makers is being established. Since most new investors prefer small stocks to wet their feet on the internet. Is this healthy for Wall street? I should say so. The market makers hired daytraders to learn the business. Now, they are learning the real market making efforts. It will only maintain value in the equity field. But they also have to turn around most of the small companies. The responsibility will bring them infinite rewards. Good Luck to all investors. Things can only get better from now on.

To: Arthur Tang who wrote (722)	9/26/2000 8:18:45 AM
From: Arthur Tang	Read Replies (1) \| Respond to of 769

When you buy a basket of stocks, you have started a hedge fund? Absolutely true. So do you balance the portfolio; so that the gains might balance out the losses(a classical hedge). Then sell the losses(tax loss benefit) or the gains to catapult into other stocks when the economy gets better. You will only have to pay income taxes, which elevates your cost. So, hedging has to have a chance for all the stocks to move up when the economy is good. Perhaps even average the cost down with some stocks split. Or, you can anchor a big stock with many small growth stocks for aggressive investment. And you don't buy or sell too often. My father did it that way, he did not buy any stock that the management is weak. On the other hand, I buy only those stocks that the management is weak and try to turn them around. The results are very slow. And the management sometimes go back to their old ways. So, to do the hedging, I have to program the progress of each stock and lead the consulting efforts to tune their results. Each year perhaps one stock will reach its zenith, the rest can flounder. It is another way to hedge.