Replies to post #18472 on EcoloCap Solutions Inc. (fka ECOS)

[CG09]

Has to be, it's automatic after buys on the ask and when the bid gets wiped out. I see it on a ton of others here as well.

[TheDoogieMan]

Possible answer

" When an MM is at the bid or offer showing 100 shares for sell or purchase, in a majority of the cases, he or she does not have 100 shares (only) for sale. MMs are in the game to make money for themselves as well, while still executing orders for clients.



If you do see a huge bid or offer... tens of thousands of shares, or hundreds where it's not usual, these are the even shadier guys trying to make people think they have huge orders. Trust us, they don't. That bid or offer will disappear just before the price of the stock actually reaches there. Penny stocks are ripe with that type of dishonest manipulation. Perhaps, when we have a much money as Buffett, we'll watch for those - and hit that bid or offer for all of the shares shown. Then wonder how they'll explain THAT to their manager.



They will almost never show their hand to let others know what order they are working. For instance, let's say an MM has an order, or know he will be getting an order to purchase 25,000 shares of a stock at $5.00. He will never bid for the full 25,000 shares. He will place a 100 or 200 share bid at $5.00 or lower. Why? Simple. What if there is someone, possibly another MM hoping to sell 25,000 (or more) shares. If the market maker places all 25,000 shares at the bid at $5.00, the seller can them immediately put the shares to him and the trade is over, all 25,000 shares at $5.00.



The MM with the bid will put up only 100-200 shares to see if any fish bite. If they do, he'll remember who sold him those shares and move his bid down to $4.95, $4.90, etc. and see if he can get more there. If he does, great, he'll keep working the price down as far as he can go to get the shares as cheaply as possible. Perhaps he now has 25,000 shares with an average price of $4.80. When his customer comes along with the order to buy the 25,000 shares at up to $5.00, he can then sell them to his customer at $4.95, or $5.00 for that matter. At $4.95, the customer is happy because he would have paid up to $5.00 per share and the MM is happy because he made $0.20 on each share. NOW the broker can add his commission! "

Possible answer here.