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

To: Robert Graham who wrote (183)	2/27/1999 12:14:00 PM
From: Rick Faurot	Respond to of 429

Bob, Nice to hear from you again. I sure respect your opinion. On this one, though, I have seen it so often I just think of it as fact. Example: I am trading CSCO yesterday. Most of the displayed tiers are any where from 100 shares up to maybe 3k. These are typical displays. MMs who are working orders usually display 1k and refresh and adjust as the market moves. The market is very dicey and nervous, lots of twitches and few trends. At key moments, an INCA 99 order suddenly displays on my Realtick Level 2. This is short for 9900 shares. That 99 is always a tipoff to me that someone, in this case GSCO, is "pushing" the stock one way or the other. The verification that this is a maneuver is when I see this INCA order drop from 99 to, say, 87, then suddenly get withdrawn with no matching print. Usually, though, the display of the 99 instantly paralyzes the trend in the stock and turns it in the desired direction without INCA getting hit at all. If the INCA 99 is an offer, I will look for GSCO waiting maybe four ticks down to pick up shares at the bottom he has created. This display of INCA 9900 or 10k shares is so commonly used that most daytraders immediately recognize that something is up and they back off. I admit that at the level of trading you are used to, a 10k offer would not be significant of much, as institutions are moving huge blocks all the time. But for daytraders, the context is different. We are trading usually 1k share lots and that often represents our whole equity plus some margin. We can't afford to be wrong by much and that makes us "weak hands." The MMs know this and they make money off of our weak position all day. The only thing we little guys can do is go with the flow, even if it means dumping fundamentally sound positions at times. On another topic, how much do you rely on real time charts to select entry and exits in trades? Mind sharing a little of your setup? I am moving more towards TA and charts to guide me and I am looking for all the help I can get. Rick