MARKET MAKER UPDATE 04-03-2008
By Bill Panetta
Let Me Start off by saying this: Level 2 Does not have the same effect like it did 7 years ago except for OTCBB Stocks & Pink Sheet Stocks. What Do I mean By This? NASDAQ is all chart plays, level 2 has no meaning as it once did for NASDAQ Stocks, and too many games can be played now on level 2. Simply put if you don't know how to read the charts you will get killed on NASDAQ Stocks.
With all the changes on Level 2 Traders have been forced to learn TA, You could had a made a killing with level 2 before 2001 with out TA; I have witnesses that have proven this.
And when I make this comment I am talking about regular trading hours, after hour's different story. Bottom Line Level 2 does not have the same effect on NASDAQ Stocks that it did 7 years ago because of the New Super Soes Trading System being implemented in 2001 and along with 1 cent spreads, it was the worst thing NASDAQ ever did for traders IMO. The Traders from 5 yrs ago know what I am talking about.
Let's talk about the 2 exchanges where Level 2 has not changed and having level 2 is really important to your trading. I am talking about The OTCBB & PINKSHEET Markets.
If you learn how to read into Level 2 on the OTCBB & PINK SHEETS it will really enhance your trading. Let's break down the Market Markets.
There are 4 categories of Market Makers let's talking about the first one.
(1) Retail Market Makers:
These are the market makers from very popular brokerage firms. They handle a lot of the order flow for small retail investors.
NITE: NITE
UBSS: Schwab
**SBSH/AUTO: Smith Barney
ETRD: ETRADE
**AUTO is being used by Ameritrade and Penson Brokers as an alternative to SBSH. if SBSH does not want the order flow or does not make a market in the stock he sends it to AUTO.
(2) This is the list that you really have master because these are the MARKET MAKERS that handle promotions, insider transactions also S-8 and CD Transaction.
CD: means Convertible Debentures they are loans the come due and get sold into the market by the loaning company.
There are lot market makers in this category so I will break it down to who are the most important: These are some of the more active MARKET MARKET MAKERS on the street:
VERT: been really active on the right side of the box lately.
NITE,UBSS, AUTO-SBSH: are u surprised, not only do they handle all the retail traffic but these days they do all the selling for the promo guys as well.
Honorable Mention:
HDSN
SSGI
ABLE: if hes on the bid great sign he plays both sides
NOBL
(3) There are lot market makers in this category so I will break it down to who are the most important: These are some of the more friendlier market makers on the street.
BID Side Favorites Friendly Most of the time
DOMS: can be a alight seller at times
LABS: love when hes on the bid
MAXM:
HILL:
VFIN: used to be a seller a lot more friendlier these days.
SALI:
VNDM: light seller
SEAB:
WDCO:
BEST:
EFGI: can be a seller at times
BMAS: starting to get active
PERT: light seller
GSCO: if hes on the bid pay close attention, he rocked DIAAF when it ran recently.
DLNY: new kid on the block. good trader
BEST: RIP
BERG: they no longer support pinks from what i hear.
(4) ECN MARKET MAKERS
Category 4: ECN MARKET MAKERS: Electronic Routes
these market makers are only used on OTC BB stocks. They do not work for pink sheet market.
ARCA: love him on the bid he will kill a run on the ask.
EDGX: love when hes on the bid.
**Also hearing there will be a new ECN for pink sheet stocks in the near future.
There are probably a few market makers that I left out or there will a few new market makers that show but for the most part these are the major players. Good luck hopes this helps.
Bill
