Wednesday, August 03, 2011 2:22:37 PM
Market Maker info (part 4)
Ok fellas, so we all know what MMs do to manipulate price, but my chart below demonstrate how they manipulate the chart in order to create panic selloffs. Lets go back to Monday, MMs know that all traders use some type of technical analysis to base their buys/sells. Knowing this they can manipulate charts to create selloffs. Lets take for instance the Parabolic SAR, this is widely used as an entry/exit indicator. On Monday, the MMs start the day with a huge bid/ask spread of .0022/.0034. They immediately whack the bid price at .0022 with a 20$ order. Seems harmless, but if you look at the chart, you will see that the uptrending Parabloic SAR was taken out and confirmed a downtrending parabolic SAR. Investors may unload, not knowing that it was a 20$ order hitting at .0022, which by the way was never hit the rest of the day and the bid never reached anywher near it the rest of the day. Pretty interesting if you ask me. (chart below)
Ok fellas, so we all know what MMs do to manipulate price, but my chart below demonstrate how they manipulate the chart in order to create panic selloffs. Lets go back to Monday, MMs know that all traders use some type of technical analysis to base their buys/sells. Knowing this they can manipulate charts to create selloffs. Lets take for instance the Parabolic SAR, this is widely used as an entry/exit indicator. On Monday, the MMs start the day with a huge bid/ask spread of .0022/.0034. They immediately whack the bid price at .0022 with a 20$ order. Seems harmless, but if you look at the chart, you will see that the uptrending Parabloic SAR was taken out and confirmed a downtrending parabolic SAR. Investors may unload, not knowing that it was a 20$ order hitting at .0022, which by the way was never hit the rest of the day and the bid never reached anywher near it the rest of the day. Pretty interesting if you ask me. (chart below)
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