<btw if a broker is holding shares to "lend out" they are acting as a MM... because they will also fill the bid/ask of clients out of this pool>
Not usually. They make money by routing trades through certain exchanges. That is also why High Frequency Trading makes money even if they are buying and selling at the same price.
The broker also makes money loaning out shares to shorts. The broker loses the income on both the trade routing and loaning out the shares if they fill an in-house order with them. They are bound to provide the best fill, so there is no advantage to filling in-house trades from client shares. They will fill in-house trades from in-house inventory though when they want to increase or decrease their speculative position.
What you describe makes them the least amount of money. It is not how it is done.
lbc face it if a MM was not buying this stock it would be at $0.01....
the fact is a MM has to buy the stock if they can't match up a buyer!!! same goes with selling the stock. however if you think they have not been a net buyer since this came out of trading halt... i have some beans to sell you...
this is where the bid/ask comes from!!! they make the quotes and have to fill them no matter what!!!
how do you all trade stocks and not even know the very most simple parts of how they work???
btw if a broker is holding shares to "lend out" they are acting as a MM... because they will also fill the bid/ask of clients out of this pool...
<where do you think shorts come from??? we loan our shares strait from guess who???>
Brokers loan out shares of their clients. They do this for a price. It is a very lucrative market.
<the whole definition of a market maker is one who holds shares to provide liquidity in an exchanged stock>
You are wrong. Most trades come from MMs matching up buyers and sellers. When there is not a balanced market, a MM still provides liquidity. That is why it is legal for a MM to nak_ed sh_ort when it is in conjunction with making a market. MMs don't hold huge inventories of every stock they make a market in. That should be common sense for you. They are more likely to hold inventory in a stable blue-chip than a declining pen_ny stock.
It just is what it is.
>> When they don't need shares anymore, it will drop much more quickly on lower volume.
The Three White Soldiers is a bullish sign and today's reaction was to be expected.
You have no evidence whatsoever that MM's were buying in the '40 today.
I predicted we would have a flat week and I will be proven right. You will be proven wrong, as usual.
ibc see you are missing something here...
where do you think shorts come from??? we loan our shares strait from guess who???
btw maybe you all should look up the definition of a market maker before spewing about how they don't hold any shares...
the whole definition of a market maker is one who holds shares to provide liquidity in an exchanged stock.... jeeze
There seems to be some confusion. Yahoo censors any post I try that uses the proper terms to explain it.
A MM will match buyers and sellers WHEN POSSIBLE. When it is NOT possible, they are still bound to provide liquidity. That means they have to accumulate an extra inventory when there is net selling or do nak_ed shor_ting when there is net buying.
Pipster... they will NOT keep an inventory of shares in a declining Pen_ny stock. That is why when the price rose... it rose quickly. If they need to go sh_ort, it will be at as high a price as possible. They will absorb shares on the way back down until their books are in balance. Then you will see them going back to trying to match buyers and sellers.
If they had plenty of inventory, you would not have seen the price rise as quickly as it did. If they were close to even on inventory today, you would have seen the price drop more quickly. It didn't drop as much since they had to cover the shares they sold previously. When they don't need shares anymore, it will drop much more quickly on lower volume.