They are at it again in my view.30 Mar 2026 10:39
Market makers (MMs) use various techniques to manage large buy orders while minimizing upward price movement, ensuring they can accumulate or fill orders at a lower cost. These methods rely on controlling the order book, managing supply, and leveraging high-frequency trading algorithms to keep the share price within a specific range.
Here are the primary techniques market makers use to "hold down" a share price:
1. The Iceberg Order Technique
Market makers use "iceberg orders"—large, hidden orders of which only a small portion is visible to the public in the order book.
Cheddar Flow
Cheddar Flow
Method: By displaying only a small "tip" of the iceberg, the MM avoids alerting the market to massive demand.
Result: Sellers continue to offer shares at lower prices because they do not see the massive, incoming buying volume, which would otherwise drive the price up.
2. Spoofing and Order Layering
Market makers may place, and quickly cancel, large sell orders to create a false impression of heavy supply, a tactic known as spoofing.
Reddit
Reddit
Method: If a market maker wants to buy large volumes without driving the price up, they might create a "wall" of sell orders at a slightly higher price.
Result: This discourages other investors from buying, fearing a price drop, allowing the market maker to buy at a lower, stable price. The fake orders are cancelled before they are executed.
3. Actively Selling from Inventory (Dark Pools)
When faced with high demand, market makers may fill buy orders from their own inventory rather than purchasing from the open market.
Investopedia
Investopedia
Method: The market maker acts as a contra-party, selling shares to the market from their own holdings (or by shorting) to keep the price down.
Dark Pools: Large orders are often processed in "dark pools"—private exchanges that do not immediately disclose trade volume to the public, thus not influencing the public exchange price.
Investopedia
Investopedia
+1
4. Triggering Stop-Loss Orders
Market makers know where many retail traders set their stop-loss orders.
Method: They may intentionally push the price down to hit these "stop-loss" levels.
Result: This triggers an avalanche of automated sell orders, creating artificial downward pressure (a "liquidity grab"), which the market maker then fills, allowing them to accumulate stock at a lower price.
5. Managing the Bid-Ask Spread
Market makers manage the spread—the difference between the price they buy (bid) and sell (ask).
Investopedia
Investopedia
Method: In times of high demand, the market maker might widen the ask price or refuse to fill at the current lowest price, forcing the price to hold or fall back to a "fair value" that they determine.
The Motley Fool UK
The Motley Fool UK
+1
Summary of Goal
Market makers are not trying to "lose" money; rather, their goal is to manage volatility and fill large volumes. By utilizing these tools, they prevent a sudden inflow of buying
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