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Microcap & Penny Stocks : PanAmerican BanCorp (PABN) -- Ignore unavailable to you. Want to Upgrade?

To: barbara sperino who wrote (8381)	7/25/1998 1:33:00 AM
From: BONGIZMO	Read Replies (2) \| Respond to of 43774

As you have already figured out, the MM screen can be a great help in playing the 'game'. After some time you'll start to learn the different MM's and how they figure into things. It's a cross between psychology and logic and some luck but the goal is to try to think like the MM and what their angle is. First off, everybody often assumes an MM is buying or selling for their own account. This may or may not be true, Herzog HRZG,MH Meyerson MHMY, Mayer MASH are some of the larger wholesalers, that is they act as an agent for buyers/sellers. When you see these type of firms bouncing from bid to ask it's not that they are trying to 'get' us it's simply they are executing trades for different clients which is why there are times on stocks with big spreads that they might even be on the bid and offer at the same time. Now yesterday you were correct in your assumptions about HRZG, as the nations largest wholesaler of OTC stocks, when you saw them just sucking in paper that could be construed as a positive since it meant they most likely had a large buyer. Many of you that trade pennies or small caps will notice many of the same names on these deals and have asked me if I know why. Many brokerage firms do not allow purchase of penny stocks except on an unsolicited basis thus if you called a broker at a major firm and wanted to buy PRWT, that firms trader would go the wholesalers to bid for the stock. Look at any of the pennies you follow and most likely you'll start to notice the same cast of characters. The next important thing many have picked up is the increasing number of market makers. That and/or increasing volume almost always precede price movement and action in a stock. If a security is addingMM's it means that it is gaining coverage and the MM's feel they canh make some money trading the stock. Watch as interest wanes on a security and you will see the MM's drop it like a bad habit. Always watch for non wholesalers coming into and out of a security, In PRWT's case you noticed YDSA Yi Desmond Schroeder has disappeared, I remember one of us noticed they had spent there last days on the offer which means they either had a seller or they were unwinding their position. The stock gets sold and they stop making. What is important is to see what retail firms do as they are the ones with brokers that might be presenting the stock to clients. If a firm with some retail power gets behind your deal that's when you want to sit back and enjoy because on these small ones that's when they can really rip leaving daytraders scratching there heads. Now I've tried to give some insight into the MM screen and will answer any questions to the best of my ability. Please realize this is just a real basic overview. There's far more including MM's buying through each other, a firm sitting on the offer giving the appearance of selling while buying stock off the bid through another MM etc. etc. Hope this helps... P.S. Everyone should be aware that MM's often short the stock and cover on the bid. If I buy 200000 PRWT at .05 and the bid is .045, the firm that filled my buy may not of even had stock, they simply shorted it to me (sold me the stock) and then simply move from the offer to high bid of .046 to catch sellers and make money off the difference. I bring this up so nobody gets to caught up in following any one market makers actions, we still are on our own and the MM screen is just another tool that may help us win in the long run.