market makers


84 0
i have been trying to find out how market makers work, are they the reason behind false rallies, how stocks go down before a good news etc, do they try to outplay the investors?


Experienced member
1,071 3
Market makers provide the liquidity. they are often obliged to give a quote at all times. e.g if the last trade price was 25.45
the mm will quote 25.44 bid 25.46 ask. They generally make their money between that spread. Therefore, they need liquidity an volume more than direction.

They get this buy sometimes paying large brokerages to fill the brokers order flow/book at the market price, especially on NASDAQ. This is why they move the market towars stops - they know there are lots of orders there which means money for them, as they have more opportunity to transact.

This is how I see it. Others may disagree???
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