Market Makers as in a (dedicated) designated specialist.
To set the scene, we will take it as a given that for whatever reason, there is a need for a MM in GERS stock. So a person in authority told me to make a market. I am reluctant to take on a new listing. I have over 60 right now and I only have so much capital. So, they prevail and I agree to make a market. Checking my capital against the number of listings and etc I post my bid of $ 0.05 and my offer of $ 0.06 I now stand ready to buy or sell at these numbers. Some trader bids $0.056, I could care less. Another trader offers @ $ 0.058 Those numbers are hit or taken and I am busy on other stocks. Then, my bid is hit, and again, and again, I now own 100,000.000 shares and I really do not want any more, so I lower my bid to $ 0.045 The bid is hit again, where are the traders that were "skating me for a couple hundredths of a penny? I then drop to $ 0.04 bid and $ 0.045 offered. At this point, traders come in and trade at $ 0.040 or perhaps $ 0.41 and cut me out. As the bounce continues there are eventually no offers under $ 0.045 so the buyers start taking my offer of $ 0.45 Seeing this, I need to find out where the market for this stock really is. So, I slowly raise my offer (price) and there are still takers. I raise it to $ 0.05 and there are still buyers. I go to $ 0.055 and then to $ 0.06 and then $ 0.065 At this point, there are traders selling under my bid. So, at this point the market is stabilized.
In the above scenario, I described the role of a market maker. He is the buyer or seller of last resort. He makes a market when nobody else will. When some intellectually challenged poster bad mouths the marker maker it reveals how ignorant he is. The market maker comes to work each day to make a living. To those who think he comes to rob and pillage are only revealing their own inner character. Their very own words about the MM's or other posters are revealing their own inner character.
This is about as basic as I can make it. Now, there have been electronic innovations, to be sure. But the nitty gritty of trading is as old or older as the ancient Egyptians. Dress it any way you like but trading is trading. You see some one needs to take the opposite of your side, MM is there to fulfil your need of an orderly market. Although designated mm get the news releases under embargo, he is legally obliged to act on it even before other people can.
I doubt we have a specialist on board but; Jim showed us a nice trades overview that showed all nice and (rosy) green. That is actually exactly what we witnessed as described in text above.
The first trades took out first bid, upon pretty soon when there were no fillers the offer price dipped below opening price. Offers are sells. If people take up on that offer it is registered as a buy very nice and calming green colour. Later in the day we even our position out.
MM don’t care where price is as long as there are trades, they get paid per trade/volume/liquidity not with stock price gain. So sometimes they go searching if bids placed well below other / his bids are real and pulls his bid and makes some tease sells to hook up as many as possible.
