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Re: smallinvestor81 post# 28641

Tuesday, 06/24/2014 10:23:06 AM

Tuesday, June 24, 2014 10:23:06 AM

Post# of 42621
ANAS MARKET MAKERS...why the price drops?

Must read for those who wonder why the price goes up or down with what appears to be no volume...
You see a 250K sell order post, but you don't see the MM post a sell order for 2 Million...Until the T-trade at the end of the day...but even then, it is an Average of all the day's trades.
(2+2 does not always =4)
Try not to read into the sudden drops that appear to be only a few thousand shares...the MMs do not want you to see everything.

But as soon as Alternaturals gets more Press and Public awareness, the MMs will back off because they can't counterbalance all the buying that will occur.

Hope this helps a little!

http://learn.advfn.com/?title=Market_Makers

What is a Market Maker?
A market maker is a company, or an individual, that quotes both a buy and a sell price in a stock held in inventory, hoping to make a profit on the bid-offer spread. They are often referred as as "MMs" or "MM."

On the New York Stock Exchange (NYSE) and American Stock Exchange (AMEX), they are called Designated Market Makers (f/k/a "specialists") and act as the official market maker for a given security. The market makers provide a required amount of liquidity to the security's market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders. This helps prevent excess volatility, and in return, the specialist is granted various informational and trade execution advantages.

On the NASDAQ, OTCBB, and Pink Sheets, market makers compete with each other by individually quoting the best bid and offer they're willing to execute a trade for on behalf of their firm or client. These market makers are required to maintain two-sided markets during exchange hours and are obligated to buy and sell at their displayed bids and offers. They typically do not receive the trading advantages a specialist does, but they do get some, such as the ability to naked short a stock, i.e., selling it without borrowing it. In most situations, only official market makers are permitted to engage in naked shorting.

You can see Market Maker Activity and Quotations on Level II. You'll see their best bid and ask quotes and can watch them shift their quotes in real-time. This information can prove extremely valuable as a trader. Each Market Maker is identified by their MMID (Market Maker ID). An MMID is the shortened firm name and is displayed on Level II (examples: NITE, DOMS, ETFC, FANC).

[edit] How does a Market Maker make money?
A market maker makes money by buying stock at a lower price than the price at which they sell it, or selling the stock at a higher price than they buy it back. Ordinarily they can make money in both rising or falling markets, by taking advantage of the difference between "bid" and "offer" prices.

Market makers also receive liquidity rebates from electronic communication networks for each share that is sold to or purchased from each posted bid or offer.




http://incrediblepennystocks.wordpress.com/2013/06/25/incredible-penny-stocks-what-is-a-form-t-trade/

Trying to decipher the meaning of these trades with the limited information that is available on the subject led down several dark paths. Clearly, the average investor is not meant to understand the concept or its rules. Even more disconcerting is the second part of the SEC message “Recent amendments to FINRA rules will expand the types of situations in which Form T is to be used, but they are not yet in effect.” That means there is even less transparency about this mysterious T Trade.

After months of due diligence, there are a few poorly publicized uses for a T Trade. The most important factor here is that the only requirement of market makers by FINRA is that they must report all trades in a day. They are not required to do so when the actual trade occurs.

To avoid creating “an unbalanced market”, market makers often do not report certain trades during the day to the public and then use a T Trade not to “scare” investors into thinking a market for that stock is going in one direction or the other at the spurring of one large investor.

If a market maker wants to accumulate a large amount of a stock in one trading day, that market maker may actually not report any of the trades that occurred until the trading day has ended so as not to alert the market to the collection. This practice is completely legal under the FINRA rules of the OTC Markets so long as the trade is reported at the end of the day.

To execute a Market on Close” order, a market maker may have an order to purchase the stock at a certain price at the end of the trading day. This is the most unlikely scenario because it needs to be assured that someone selling the stock and someone buying that stock are agreeing upon a price. Simply put, this is more likely with insider buying and selling.

The T Trade that the public sees is nothing more than one or all of the above scenarios. The T Trade reported at the end of the day can be from one market maker or many involved market makers. It can be a single purchase price but is usually an average of all of the previously unreported purchases from that business day.

Penny stocks are an exciting and lucrative business. As most everyone will tell you, it is not for the weak of heart. There is definite money to be made in the OTC Markets and more penny stock millionaires are made every day. But the best way to win the game is to know the rules!

One additional fact surfaced about market makers while researching T Trades. Did you know that market makers are not required to honor their offer price? That is correct, because the OTC market is essentially a “best offer” market. If a buyer meets the asking price for a security, the market maker can, and often does, decide to rescind the offer, not sell the security and adjust the selling price.



In My Personal Opinion Of Course!
Long ANAS!