Re: Market Maker deception?
in response to
by
posted on
Jul 22, 2010 03:31PM
Sometimes they are.
Market Makers are there to do just that...make a market. They hook sellers to buyers and visa versa.
When a sell wants to sell and there is no buyer, the MM buys from the seller at the bid. When a buyer wants to buy and there are no sellers, the MM sells to the buyer at the ask. For his services, he makes the spread. He must, however, have shares of his own to do what he does. This fact makes him a trader. He certainly doesn't want to fill orders from his own inventory at a loss.
And, in its simplist form, that's the way it works!