Re: Action today was odd...(paylslyone)-- need to learn alittle
in response to
by
posted on
Jun 16, 2009 12:42PM
Paylslyone,
1. No OTCB after hours trading for the average trader. period. Already explained a million times what trades posted after 4pm are. MMs have 90 seconds to post a transaction during market hrs....sometimes they are late or didnt report correctly and its posted at 4:00-4:15pm....... you will NOT see a trade at 5pm - 6pm on a OTCB platform. You MAY see pre-market MOVEMENT on L2 and could see MMs trading in premarket between themselves........ but no Joe Trader can.....(maybe maybe there is exception or a serious investor who could......but 99.99% your not gonna see that.
#2.Seriously.. take it easy.... manipulation on a spread of .005??? What are earth are you talking about... i think your alittle lost about the L2 and MMs.
Spread is EXACTLY how the MM is suppose to make money!!!!!!!!!!!!!!!
Again... ill run another example for you.
NITE is on the BID at .14 and on the ASK at .15
Joe Trader #1 wants to buy 1,000 shares and puts in a limit buy order at .145 ( because he doesnt want to buy on the ask and hopes that he pay alittle less or thinks the stock may drop.)
NITE knows he has a seller on the bid at .14...... so he drops the ask from .15 to .145 now he can take fill the order for Joe Trader #1. 1000 shares go through......... afterwards NITE can move the ASK back to .15 as soon as he sees that more orders are coming in .145 +
NITE made money .005 spread instead of .01 . The spread will constantly change.... the tigher the spread..the more volume/movement/interest or liquity on a stock. higher spread means that there is limited interest/volume and the MMs are protecting themselves from offering trades and not being able to fill them.
Spread Changes-----
Other MMs will stop/compete against NITE if he drops the BID too low because a number of things could happen.
1. Bid drops ----- No sellers ( Ask drops and buyers now buyers are coming in wanting cheaper shares..... MM needs to fill in the order.... must raise BID to get sellers shares..)
2. Another MM steps up and offers a higher BID - ( uptick on bid) if other MMs see there is a demand for a stock... they will offer the best price for the sellers and take their shares---- and fill the buyers orders on the ask. NITE can sit on the BID at .145 but if HSDN offers Joe Traders .1478 ........ where do you think the brokers are routing those orders to??
If there is volume/demand...... its OK for the MM to move the bid/ask around.. thats their JOB!!!!!!!!!!!!!!!!!!!!!!! its not manipulation...........its the market.... supply and demand.... MM will move around and tries to find the best balance of trades... both supply and demand....