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Alias Born 09/10/2009

Re: kubotapete post# 5098

Tuesday, 10/13/2009 10:13:25 PM

Tuesday, October 13, 2009 10:13:25 PM

Post# of 5386
kubotapete--

It is obvious that you do not understand the functions of a market maker. Similar to a specialist on a stock exchange, the market maker serves two basic functions. In the first case he facilitates buy and sells between individual investors. In other words if there is a buyer at a particular price and a seller at the same price the market maker can cross the trades at the given price between the two parties. In this case the market maker does not act as a buyer or a seller of the shares, he just acts as a go between. The market maker, in such a case, receives a part of the commission for his services. In the second case the market maker can act in his own interest and buy for his own inventory or sell from his own inventory. In this capacity you are correct that the market maker wants to buy low and sell at a higher price. This however is not the case in all instances. Just like an individual investor, the market maker can make decisions that can go against himself, and in such a case he can lose money on the transaction just like an individual investor can make bad investment decisions.
theidbeman

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