DDAmanda

[Zardiw]

How Market Makers short:

mankind Saturday, August 15, 2020 12:27:35 PM
Re: None Post # of 23512

I just started writing about MM antics but there are so many variables. Here are some basics that can help.

Most retail enter orders premarket and you will see MM’s push pricing towards saturation points. MM’s cannot sit on marketable orders at the open, so they will cross whatever is paired off and go long or short where they feel they can make extra. Why? Because those orders came from a brokerage where the MM’s internal salesperson has a relationship. So broker sends 100,000 electronically to buy at mkt.
This is generic example...so MM moves price up $.01 ex $0.02 to $.03 but MM also has resting sell limits @$.03 lets say they have 50,000 gtc sell $.03. Now while the MM is taking this to $.03 they buy $50,000 at various levels say $0.025 avg. market opens MM sells the 100,000 @ $0.0299. So now MM is short 50,000 then they let the stock collapse and cover the 50,000 short at $0.025. The MM is now flat, they made 1/2 a penny on the way up and 1/2 a penny on the short they created so $1,000. They risked $0.0001 on that price improvement. Now the trader will split this $1000 with his internal salesperson

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