Re: 1.4 cent spread between b/a / lake? ..john / lake...John.../ Gil
in response to
by
posted on
Oct 10, 2007 07:35AM
The old rumor in the 90's was if you had a stop limit (loss) order, the market makers were rumored that they would walk the price down to take out the shares when they had a large order to fill.
If a large order was placed at a limit... let's say .185 (18.50, whatever) and that was the limit the buyer wanted to pay for it, the mm could sell it to the buyer immediately (by selling short) or if it was too large of an order, by filling it over several trades or days by walking down the price, thus inducing selling by those worried about their investment losing value (in the declining price) or, if fast enough, by taking out stop loss sell orders during the day before such orders could be cancelled by retail investors not watching minute to minute trades.
As for those here who have been buying at the bid.... the SEC has a rule which requires that MMs can NOT place MM priority to their buying at the bid ahead of retail... so, you can buy at the bid... but you do risk the order not being filled as it is in the mix of everyone at the bid..