Reading Market-Maker Signals
See the signs and messages they send each other
Many traders believe that market makers will "signal" moves in advance buy using small amounts of buys or sells as "signals". The "signals" are from one market maker to another.
100 I need shares.
200 I need shares badly, but do not take the stock down.
300 Take (or I am taking) the price down so I can load shares
400 Keep trading it sideways.
500 Gap the stock.
This is a theory put forth by a lot of penny stock and non-penny stock traders. This is not a guaranteed trading method but can lend some insight to comarket makerunications. It can pay to watch a few market makers of your favorite stock over several days or weeks to see if they follow these or other similar signals. That way, you can divine what they are going to do and jump in ahead of any move that may come.
Personally, I have worked on the Nasdaq Market Maker desk of a major firm and while the folks I worked with did not use any signs like the ones above, they did know what certain other MMs were about to do by watching them move their bids and asks. One example - When I first started and was sitting with one of the MMs, he said "See that? He dropped his ask and shows 1000 shares. He's a buyer." Say what? -- It wasn't even a minute later that the bids dropped lower after his 1000 share ask. As soon as the bids all dropped away, the asks from other MMs and internet brokers all fell below his. He then bought thousands of shares about $0.25 lower than where the bid was before his fake ask - on a $7 stock. These things happened ALL of the time.
