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Non-Tech : Market Makers - What They Do and How They Do It -- Ignore unavailable to you. Want to Upgrade?

To: Curbstone who wrote (118)	1/27/1999 8:07:00 PM
From: Rick Faurot	Read Replies (2) \| Respond to of 429

I think MMs know that some of us can spot head fakes. The thing is that often head fakes work perfectly because some traders who don't understand the play jump into it and then other traders who DO understand it jump in too for a scalp. The headfake if it works right is meant to drive a stock up enough beyond support to create a beautiful shorting opportunity for the MM, or, conversely, to drive a stock down a point or so and make it a good buy for the bounce. Serious head fakes aren't that subtle. Any time you see a 10k bid or offer appear out of no where, the odds are it's a fake. If an MM really wanted to sell or acquire, he would be more tricky about it, buying in 1k lots while displaying 1k. The other head fake I mentioned below, what I called a "gang fake" is a lot tougher to detect. And it can be a reverse fake, which is even more dangerous. In the reverse, the MMs join up on the bid to try to spook a run. When it doesn't go, they all pull off the bid and let the stock fall huge and then buy it up cheap. Very wicked if you get caught in one of these because the drop can be multi point just when you thought you had a winner locked up. Ouch!!! RickF