Mm stock lingo
Discussion in ' Learn how to trade or invest by asking questions ' started by Albert , Aug 13, Log in or Sign up. Online Traders' Forum. What are MM's?
Market maker
Discussion in ' Learn how to trade or invest by asking questions ' started by Albert , Aug 13, Log in or Sign up. Online Traders' Forum. What are MM's? Many of you hear every now and then how MMs are holding a stock price down or etc. But what are they? An MM is not some guy sitting in a dark basement, its often a firm which will specialize in a group of stocks, or have a relationship with MM's who deal with specific stocks.
Its the the job of an MM to provide liquidity and in the small cap world, this is very important. Unfortunately a side effect of this job of providing liquidity are large short positions by MM's. If I call my broker and I want to buy s of WXYZ , he will call up the trader for my brokerage who then will call up a market maker who holds inventory in that stock.
Most traders already have set relationships with MM's they deal with. It is the task of the MM to be able to provide my brokerage with shares, and quickly.
The MM may not have shares himself, but he knows other MM's who do, so he will actually have a short position in the stock until he can purchase back these shares.
This is when most of the mess begins, MM's may try short more of the stock to get it lower so they can cover the short at a lower price. Albert , Aug 13, You can watch MMs actions before your eyes with level IIs. Technical Alchemist , Aug 13, Rynn , Aug 17, You must log in or sign up to reply here. Show Ignored Content. Share This Page. Your name or email address: Do you already have an account? No, create an account now.
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MM signals: > bring the price down at least 30% > provide resistance > let the stock float. MM SIGNALS > I need shares. The MM may not have shares himself, but he knows other MM's who do, so he will actually have a short position in the stock until he can.
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Stock Exchange Abbreviations
A market maker MM is a firm or individual who is actively quotes two-sided markets in a security, providing bids and offers known as asks along with the market size of each. Market makers provide liquidity and depth to markets and profit from the difference in the bid-ask spread. Many market makers are often brokerage houses that provide trading services for investors in an effort to keep financial markets liquid. A market maker can also be an individual trader known as a local , but due to the size of securities needed to facilitate the volume of purchases and sales, the vast majority of market makers work on behalf of large institutions. Each market maker displays buy and sell quotations for a guaranteed number of shares. Once an order is received from a buyer, the market maker immediately sells off his position of shares from his own inventory, to complete the order.
Market Maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid—ask spread , or turn. Securities and Exchange Commission defines a "market maker" as a firm that stands ready to buy and sell stock on a regular and continuous basis at a publicly quoted price. A Designated Primary Market Maker DPM is a specialized market maker approved by an exchange to guarantee that they will take a position in a particular assigned security, option or option index. Most foreign exchange trading firms are market makers and so are many banks. The market maker both sells to and also buys from its clients and is compensated by means of price differentials for the service of providing liquidity , reducing transaction costs and facilitating trade. When a buyer's bid price meets a seller's offer price or vice versa, the stock exchange's matching system decides that a deal has been executed. In such a system, there may be no designated or official market makers, but market makers nevertheless exist. The market makers provide a required amount of liquidity to the security's market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders. In return, the specialist is granted various informational and trade execution advantages. Other U.
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