Market Maker Tricks

Quote from candletrader:

Market makers buy when froggie is selling and sell when froggie is buying :D
More...

^^^^^^^^^^^^^^^^
Froggie;
Trading is like life , may be more helpful to watch,believe /record thier works/time & sales,charts, & end of day;
compared to mere cheap words like level 2.

Talk is cheap:D

Wouldnt call it ''tricks'' or secrets, but yes MM do have certain patterns and work habbits many people are not aware of.


Its 5 years old & people, including MM& traders form habbits they dont like to change;
Market Makers Edge
is full of helpful work patterns, by Joshua Lukeman
=====================

And disagree with the idea that if you advertise a 50% off sale you goof it up;
actually it helps to advertise a 50% off sale.:cool:
 
Quote from froggie:

Yes, very informative Brandonf, thanks. Two questions though: When a trade is done in the third market, does the inside best bid/ask prices change at all on level 2? Because sometimes I see huge orders go off in time and sales but level 2 is not affected. The chart also will show huge volume in just one certain time. Secondly, are these signs of third market activity?

.
More...

If it goes off on the third makret it never shows up on the exhange until they report the transaction, so it has no effect on L2 what so ever at the time of transaction. As for signs there is third market activity all the time. Here is a good example, kinda recent: When ELN came out with its news a few months back nearly 40% of the volume occured on the third market. Another example is when IBC came off the NYSE and became IBCIQ over 1/2 the volume was on the third market. Prices there effect, and are effected by, those on the exchange. Keep in mind though that the third market is typically just going to be large block trades going off between institutions.

Brandon
 
Quote from froggie:

Hi folks,

Anyone in here know if the market makers are aware of and can distinguish between retail orders and institutional orders? I mean can they see if a retail trader is buying or selling? And do they see our account numbers when we place a trade? Answers to these will be very helpful. Also, does anyone know of any market maker tricks that we stock traders should be aware of?

Thanks
More...

yes they can.

many retail brokers like ameritrade sell their order flow to marketmakers for execution.

brokers that do this (all the big names) MUST declare this practice in their annual statement/ pnl figures.

traders can get round this however buy specifying the destination they want their orders executed - but only if they have a direct access platform.

sorry if this has been pointed out already, but i just read the q and the first few replies and realised you were just getting grief - probably from folk who dont know.
 
I could swear sometimes that there is a camera behind my left shoulder that pipes my actions directly to the MM's handheld...



Quote from froggie:

Hi folks,

Anyone in here know if the market makers are aware of and can distinguish between retail orders and institutional orders? I mean can they see if a retail trader is buying or selling? And do they see our account numbers when we place a trade? Answers to these will be very helpful. Also, does anyone know of any market maker tricks that we stock traders should be aware of?

Thanks
More...
 
quote .........

"many retail brokers like ameritrade sell their order flow to marketmakers for execution."

True.

Can anyone point to a web site that lists market participants ID's.
When I look at level 2 I often cannot ID the players.
 
Regarding options....

I used to be in the DPM for ndx options....we would usually know the difference between a customer and a firm. Tell tale signs are the person representing the order and its size; brokers will usually let the DPM know so they can handle the order accordingly. Don't worry though; customers usually get better fills, especially if the order is small.

As a side note, 69 limits almost always traded, no matter what the price as pit traders just wanted to laugh about filling the order.
 
you mean the order size was 69 or the price?

I will be sure to try that tomorrow when I trade!

I usually trade a 1000 share lots, so I will put it at 969 or 1069 shares and see if I get filled any better.

I heard a story about someone who would try and pull a fast one on the market makers by placing limit orders for a buck below the asking, so say a stock was bid 17.77, ask 17.78, they would put limit to buy at 16.76 to see if they got dislexia for a second and filled them by mistake.
 
from what I understand, MM's see all orders. If you hide or reserve your order, the only people you are hiding it from is other traders. But you still don't want to show a big order and have all the other traders offer out ahead of you.

Also, when you pull up a stock without news, most of the MMs you see won't be actively trading that stock, they simply have programs running to provide enough "liquidity" to maintain their MM status. This is like a 100 share bid that immediately becomes a 100 share offer a nickel higher when hit.

Most of the MMs seem to only use one or two ECNs at a time. I used to know the big ones but they change every couple months when someone gives them a better deal and it got to be too hard to keep up with.

Does anyone know where this UBSS came from? They have been killing me lately.
 
You must log in or register to reply here.
Back
Top