Registered User
Joined: 3/21/2006
Posts: 4,308
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I have no knowledge in this aspect of the market, but I have been reading some old post that refere to certain tactics used by market makers that if true (IMO) are pretty low down...
Example: If you buy 100,000 shares of stock XYZ and the market maker (at this time does not want the price of XYZ to go up) so he lets you have the shares on your account (you now own them) From his personal account, but they do not reflect in the market yet... Now he knows (some how) that there is a lot of people that plan to sell there shares soon, (or even himself)..
When this selling takes place and the price of XYZ drops (as predicted) he will now buy your 100,000 shares (with the money you paid for the stock at the higher price) but he buys the 100,00 shares at the now lower price and pockets the diference...
If this is true then that would say to me that the real market manipulation is done at that level (Market maker) and that they negotiate large lot orders with (Fund managers) and other big spenders, knowing that with a little stock manipulation they will make a fortune..
I think that this happened with a recent perchase I made in VEGF (I know a real penny stock) I bought 7,000 shares at $.51 and although the shares showed up in my brokerage account, I never saw that it registered on the Tape. Latter (when the price droped to a low of $.46) There was a lot of shares traded as the price came back up to $.50
Does any one on this forum have any knowledge in this area, or am I just being paranoid...
By the way VEGF has settled at $.47 (as long as it remains above the 50 day moving average then I will hold)....
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Registered User
Joined: 1/28/2005
Posts: 6,049
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As someone who comes from a time when "stock
analysis" meant going to the library. Placing a trade
meant "talking to someone on the phone" and
"commission" meant hundreds of dollars.
I can only say that things have dramatically improved
for the little guy.
I think that some traders enjoy "victim" status
(The marketmakers, the "big bad hedge funds",
the "bid/ask spreads" how can we hope to survive?)
and it is a useful way to justify what they do.
Don't get me wrong. I'm not saying nothing bad has
ever happened or been manipulated. Its just that
you can choose to swim in these waters or avoid it.
Those who deal in low-price/low-volume issues will
face more of this.
Thanks
diceman
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I was expecting a response based more on the overall theory of the related subject..
There are actually quit a few threads (on this forum) based on the suspicion there-of, but no qualified answers..
VEGF is just an experiment in Intraday analysis and actually is very liquid (400,000 shares daily average)
I am expecting a bigger return from this stock in the form of knowledge then in $$$
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Registered User
Joined: 1/28/2005
Posts: 6,049
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That is somewhat my point.
I doubt that those who speak about this are experts.
They see something and attach all types of shady
activity to it. (this is the market trying to burn me)
Make all types of assumptions about what they
don't know.
Its very simple if you want to avoid this stuff. Trade
the QQQQ's.
(that's just the answer they don't want to hear)
All one can do is look at ones trade results. If something
is funny. Avoid that type of issue in the future.
I've heard it stated many times. Fear and greed rule the
markets. Maybe it should be changed to fear, greed and
paranoia.
Thanks
diceman
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Registered User
Joined: 3/21/2006
Posts: 4,308
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http://www.worden.com/training/default.aspx?g=posts&t=12051
I hear ya.. And you are correct as usual... I am only conducting experiments right now with this type of security..
The above link will explain my point better I think.. Just scroll towards the bottom of the thread, HNC I thought made a valid observation...
And if shares are bought and verified (they are in your brokerage account), but fail to register on the tape. I just think that there has to be something to that.. And maybee you are correct and that this happens more in the lower quality securities...
Thanks for yuor input Diceman...
Apsll....
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Registered User
Joined: 12/25/2004
Posts: 51
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One might believe every way to gain an advantage is already tried and well known, but in age of derivitives and easy access to markets is not so. Thus no matter what the written work, it lags.
Believe instead in human nature to find opportunity. Every opportunity is being taken by others against any trader, and that trader is also seeking opportunity. Competition is fierce and forever shall get more fierce. Narrow range marching market we now have is probably evidence of that, just as aggressive competitors narrow the price range and render less profitable a business line like televisions.
Yes read the known schemes of market competitors, but to find your opportunity and learn which for reasons of legality to avoid. Think of trading as a business, opportunity and by being good businessman the hoped for rewards likely follow.
Most businessmen fail; they successful businessmen from failure and most importantly look again for opportunity and try again instead of dwelling on the the badness of the situation or the competition. Second time and later they appreciate and take for granted it's a big bad world full of at least as hungry wolves want yours.
When your perceived opportunity goes bad know someone else's succeded. In case of market trade today several may have as participants in the security and its derivitives "unwind". As US Attorneys are learning, finding out which one or ones in any case is extremely complex and usually not worth speculating about except to be aware certain essential phenomena commonly affect data a trader evaluates(such as high put buying generating hedging short sales). In other words unless suspicion rests on a party with a fiduciary responsibility to the trader, forget abouth the other side of any trade.
Just my thoughts from 40 yrs experience with markets and looking into life's various situations.
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Registered User
Joined: 3/25/2005
Posts: 864
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Aspll --
I don't know who your broker is but to give you an example -- Etrade guarantees that your market
order will be executed in 3.7 seconds from the time
you place your trade. My question is, how can they
give you this absolute guarantee unless they are
willing to sell you shares from there own inventory
if they cannot match an order for you on the open
market by the time that time-guarantee has expired?
This maybe a reason that you do not see your shares
register on the tape right away.
Now, concering your suspicions of foul play among the
market makers -- I have, for a long time now, believed
this to be a valid issue. The term in the industry
for this is called slippageand it is perfectly
legal for the market makers to employ slippage where
you place your marker order expecting to get the current ask price but when it gets filled, it is at a much higher price than you wanted to pay for it because the market maker did not execute your order right away.
He held out for a higher price so that he could make
his money on the slippage factor.
I have also believed for a very long time, due to what
I have read in the past concerning this issue, that the
way to avoid being manipulated thru slippage is to place
Limit Orders.
Limit Orders enable you to fly under the market makers
radar. He is only looking for the suckers out there to
take advantage of and the suckers are the ones who place
market orders. This is all that the market makers will concentrate on. They almost never pay attention to limit orders. Thus, with limit orders, you are able to fly under the market maker's radar.
I have mentioned this on this board several time before,
but no one listens, apparently, because this issue just
keeps coming up. If you want to be happy then don't use
market orders for entry.
To tie in what I just said about slippage with what I
said in the beginning about Etrade:
Even though Etrade may give you the price you expect
on your Market Order because they guarantee execution
within 3.7 seconds, it is still a market order and
therefore, the market maker will make note of it that
there is a market order out there that he may be able
take advantage of later.
The point that I am trying to make in all of this is
that even though you may get the price that you want
via a market order, it is still an order that will
be flagged by the market maker for possible use to
his advantage later. But, he will not flag limit orders
(usually). Thus, you escape his detection when you use
them.
I hope everyone gets it this time because I am getting
tired of preaching why it is important to use limit orders for entry.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I only use market orders when I am selling, never when I am buying, I thought that was the first thing that they teach in securities trading 101...
I do use E-Trade, and although I have heard from others that were not happy with their services, I myself am very happy with them....
The type of order I used to buy VEGF was a strait limit order, and it was filled fairly quick at the price I wanted, but it did not register on the tape, so I was a little confused at the time...
I am not even complaining about that transaction, because I recieved the price that I asked for..
I am just amazed and disapointed that this type of underhanded scheme could be legal..
Maybee I will seek out a carreer as a licensed thief...
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Registered User
Joined: 9/21/2005
Posts: 566
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How much volume would be preferable for a stock if you wanted good liquidity and a quick fill for a 1,000 share lot? Also, would be correct to assume that more volume equals less chance of market maker manipulation?
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Registered User
Joined: 8/12/2006
Posts: 83
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I deal with ScotTrade and always use Limit orders to BUY/SELL Securities.
I had placed a BUY-LIMIT order to buy several 1000 shares. Out of the 1000's, few 100's will be bought against your account, even when the volume at your price point was many multiples.
I do have their ELITE-TRADING system, where I get to see all the TRADES and their associated Quantity, Time and other information. Many a times, my trade is never registered. This indicates, shares are bought or sold from their internal pool.
If you get desperate and change the limit price, it will be considered a separate trade - so more commissions for them.
In other words, being the individual, one cannot expect to beat the system. They control the system, so they get to make the rules.
As Diceman mentioned earlier, I face this problem with low volume stocks.
If one needs to avoid this issue, look at the Intraday chart. If you notice Gaps or STAIR-STEP patterns, one will have difficulty getting the price they have in mind.
Knowledge is Power. Use it to your advantage.
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Registered User
Joined: 3/25/2005
Posts: 864
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QUOTE (apsll) I only use market orders when I am selling, never when I am buying, I thought that was the first thing that they teach in securities trading 101...
My trading 101... says the complete opposite..
Enter on limit,exit either way (market or limit).
Anticipate the profit you want to make before
you enter the trade and demand your entry price
accordingly. The slippage factor via the use
of market orders upon entry can (not necessarily
will) wreak havoc on a short term traders emotions
causing him to possibly panic and exit to soon.
Why give the market maker a chance to play with
your mind? He sees you come in when you use a
market order. But, who cares if he sees when
you decide to leave? Because when you decide that
it is not to leave (exit) the stock, you are satisfied
with the profit you have made thus far and a little
slippage at the exit won't matter.
QUOTE (zag999ca)
I had placed a BUY-LIMIT order to buy several 1000 shares. Out of the 1000's, few 100's will be bought against your account, even when the volume at your price point was many multiples.
Yes, this is true if there are orders ahead of yours competing
for the ask-size shares available for the limit ask price you
are trying to get. If other orders buy up shares currently available
at that price (according to the ask size) before your order is able
to grab the shares remaining then their may not be enough shares left
at that price to give you all the shares you were requesting. So you
can winded up with a partially filled order. But, you still get the
price you wanted. With marker orders, you don't know what you are going
to get. You might place a market order to buy a 1000 shares when the
price is $10 but you may get 500 shares filled at $10 and another
300 shares filled at $10.30 and the last 200 shares filled at $10.40.
With a limit order, you might only get 600 shares filled at the limit
price you want instead of getting the full 1000 shares(due to other
orders of ahead of yours competing for the same ask-size availability)
but, at least you get the price you wanted to pay.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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"My trading 101... says the complete opposite..
Enter on limit,exit either way (market or limit)".
"I only use market orders when I am selling, never when I am buying, I thought that was the first thing that they teach in securities trading 101"...
How are we opposing each other? Our statements are identical..
The only difference is that when I want to sell a stock, I want out of it as quickly as possible.. The sell at market (IMO) is the fastest way to sell all your shares...
My statement that I use market orders to sell, never when I am buying (intrpretation)- I do not use market orders to buy stocks.....
The theory about (know your exit price before you buy a stock) is not how I define an exit strategy.. I use my risk reward formula to set the guide lines,(5% loss, at least 10% gain) I will not enter a stock unless I feel that my reward will be double the risk facter... I also rely on Resistance & Support Levels...
I agree with diceman (the stock will tell you when to exit). In my case, I let the Candlestick pattern tell me when to exit (some times to early, rarely to late)
To keep your portfolio in the black - (IMO) the two most important issues are -
A) Risk reward (under this heading, falls the ability to pick a sound chart pattern, and a good entry point, along with knowing when to exit properly)
B) Diversification (simply put, do not put all your eggs in one basket)
Like Diceman says-- Trading does not have to be complicated...
Apsll...
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Registered User
Joined: 3/25/2005
Posts: 864
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Sorry, misread that. My bad.
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Registered User
Joined: 12/25/2004
Posts: 51
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I agree it's more practical to use market orders for exit, and especially when change to negative direction appears emminent and one for instance wishes not allowing a profit to turn to loss. On thinking about my using market orders for exit or entry however I conclude what I do is not trade anything does not tend to have nearby bids/asks and I watch that behavior while holding. I continually assess availability of fast escape and will get out "too early" using limit order if market becomes noticibly thinner.
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