RE: Is it me?10 May 2019 09:36
Hi Jadele, just thought I’d throw my insight in here for what it’s worth.
With regard to the MM's I have read that there will be a at least a few involved in this share for example. I have also read that the bid is set by what people are placing orders to buy at and that ask is what people have orders they want to sell at and the price is therefore moved based on that.
While this is true it is also slightly missing the point. The buy and sell price is set by the volumes being bought and sold, news, sentiment etc. However, the bid off spread can be manipulated by MMs by putting in dummy trades, marking buys as sells and vice versa and also by delaying trades. Therefore the manipulate the price to 1. Create a market for traders trading the stock. 2. Make profit for themselves. There are some extremely wealthy MMs out there and this is how they got that way.
If MMs have a large order to fill by, for example a big institution or wealthy individual, they would probably receive a kick back to fill it. Therefore it is in their interest to fill its financially but also creating a liquid market by artificially increasing and decreasing the SP