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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: peter n matzke who wrote (1258)	7/15/1998 6:36:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 2120

Are you serious? Who do you think is taking the other side of your order with the illiquid stocks and the stocks that show illiquidity on one side during a falloff or a stiff runup? A market could not function without a MM. You must realize this despite your understandable distrust of MMs. I think we need here to separate their liquidity function which they do perform albeit rather selectively and their profit function which in many cases means aggressively pursue their self-interests. Some MMs manage to stay in that "grey area" of facilitating market activity, and others operate outside of this "grey area" through the obvious manipulation of prices. I do not think they are all bad on NASDAQ. But you know how I think we can tell which ones are aggressive? The MM on top that are taking most of the business. IMO they got there by managing to take some "shortcuts" along the way. In their current position, they use their "weight" in the market to push the smaller MMs around where the smaller MM have no choice but to fall in line. Bob Graham

To: peter n matzke who wrote (1258)	7/15/1998 9:40:00 PM
From: AHM	Read Replies (1) \| Respond to of 2120

You could not be more wrong in saying Market Makers provide no service to clients. Perhaps you had a bad experience. Let me tell you about a good one. About a year ago I purchased 60,000 shares of a NASDAQ development stage company at an average price of 3 3/4. It never saw that price again! About 2 or 3 months ago (I don't recall exactly when) it moved from beneath 2 to 3 1/8. Now that's a lot of shares to get out in a market that was trading around 90,000 - 110,000 shares a day at that price level (which only lasted for 2-3 days). For 1/16 the market makers at my firm (a highly regarded regional firm) got them all out at an average net to me of 3. Crooks? Not at all! They did an incredible job! Right after the last sale (at 2 7/8) the price of this stock plummeted and is once again beneath 2 where it will probably stay until the company disappears from the scene (which I absolutely believe will happen). These market makers accomplished this by calling every major investor they knew about who held large positions (I imagine positions that were assembled when it was beneath 2 or in the low 2's) to find those who still had an appetite for more. They worked incredibly hard for their 1/16 and did an honest and magnificent job that minimized what would otherwise have been a catastrophic loss.