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Message: Action today was odd...

Re: Action today was odd...(b-Lunist)

posted on Jun 16, 2009 12:55PM

They lower the ASK because many traders post LIMIT BUY orders inside the BID/ASK.

Bid at .14 and Ask at .15



Joe Trader wants 1000 shares at .145 Since he is asking for an order inside the bid/ask... he is gonna have to wait... an MM on the ASK could decide to lower the ASK to .145 to complete the order that Joe Trader posted.

However,,,,,,,, when the ASK is moved down.......... MM may soon get bombared with buy orders..... 2 options... MM could lower the BID ..... try to get shares from sellers who might panic that the bid fell from .14 to .135...... however another MM could step up and raise the bid to .144........ this now squeezes the first MM (because he must now sit on the bid at .144 in order to fill more shares for the buys coming in on the ask.)



the MM will make his money... so long as there was a decent spread from when he got shares to when he releases them.

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