RE: Wtf16 Aug 2022 20:40
17:31
That would be true in a matched market such as ASX & Chi-X, but AIM & OTC have middlemen (market makers) who act as wholesalers so there is possibility of a mismatch between buys & sells during certain periods but overtime 50/50 will almost certainly be the result.
"Market Makers obviously have a degree of risk. If there is a flood of sellers, because the Market Maker's job is to provide liquidity, he has to buy those shares even though the rest of the market may want to sell. If the price continues to fall he could be left with a lot of stock on his hands that he paid considerably higher prices for than he can sell for now. And vice versa - if a share is rising sharply the Market Maker has to continue selling the stock to the buyers - he could end up "short" of stock. In this situation he has sold stock he has not got, to fulfill all the buy requests, and he has to buy this stock in to balance his books, but at higher prices and makes a loss."