My point is that that they're not thinking about "investors". Ever. They're watching numbers
That's wrong. Their business revolves around order flow and market making. While market making they are being 'forced' to post on the bid and the ask to absorb whatever demand investors have at any particular time. When there is an imbalance of demand, to either buy or sell a particular stock, they are SUPPOSED to move the price in the corresponding direction in order to elicit the maximum amount of volume at any given time; which by playing the spread should give them enough profit motive to do so.
- BUT - their business also revolves around working orders for 3rd parties, mostly broker/dealers, and have an inside view of the upcoming orders for a particular stock. So, anticipating the order flow(which they actually see right there in front of them) they take a position(which they are allowed to do) to profit off the order flow. It is a known fact, hell its even allowed by NASD and is discussed by the companies who do it. Its supposed to compensate the MMs for risking their capital to internally hedge and provide instant liquidity to the market no matter what direction it moves, or what position they have.
The problem is - the people who make and run the market are the same people who have a vested interest in seeing the market go one way or the other...this creates a HUGE problem
Of course the MMs act on investor psychology, why wouldn't they? They are trading as well, trading large positions of stock AGAINST us...
(Not necessary referring to cmkx - all nasdaq stocks, especially otcbb and ps)
