The rewards can be great as well as the loses,but the game is played without regard to fundamentals and mostly only T/A applies.
When MMs get caught unaware - when big news hits for an OTC stock - they get flooded with BUY orders. Now MMs make the most $ when the buy and sell orders are EQUAL and MANY - so they get a piece of each one and do not go SHORT. MMs do go long, but not really that long - they are short term traders. They will buy at what they think is cheap, sell for what they think is a good gain, and then short again, drive the price down, cover, and go LONG again.....
So - when MMs get caught in a FLURRY of orders from investors to BUY stock, they fill some and then to protect themselves, they RAISE THE ASK. Ever noticed that it is hard to fill in a moving market?? That is b/c the MMs do NOT want to fill you until the BUYING STOPS - they HAVE to fill some, b/c they HAVE to make a market. But they will fill as little as they can get away with filling until they get a hold of the stock again - and that happens when the price rides up fast and furious. Then, many buyers start to say "well, I'm not gonna chase THIS much - I'll wait for the pullback and get it then". THe buying slows down. Of course, some people still buy - and some, more foolish people, have placed MARKET orders in a fast moving OTC stock. That is EASY MONEY for an MM, and when they see a string of market orders, their eyes light up. What they do is HOLD the Market order - sometimes for 10-15 minutes - all the while raising the ASK with as little order filling at the ask as they can get away with - and raise to where they think there will be some resistance. Then, they fill a TON of market orders at a certain price - but they DO NOT move the ASK up. They try like #### to absorb the buying flurry - and if they are successful, buying starts to taper. Then, they will close the spread to entice sellers - all the while NOT raising the ASK. A few sells come thru, and then they try to trigger some more by BUYING 100 share lots at the bid - WHICH LOOKS LIKE SELLING TO THE PUBLIC. THe public and traders think the run is over, and they start to sell - of course, MMs then do the reverse - they DROP the BID/ASK and try to fill as few orders on the BID as possible until they can walk it down to COVER THEMSELVES!! Then all the orders to SELL at market go thru - often at a SUPPORT LEVEL. Once the MMs get a few shares back and decrease their short position (they may actually even try to go LONG since they know the stock is in a rally), they move it back up, hoping to induce PANIC BUYING from all of those who BOUGHT at the TOP and SOLD in a panic when the stock price dropped immediately after they bought... MMs are sneaky ########. Know their games. Know what they are trying to do - that is, make $ at YOUR EXPENSE. Making a market for them is secondary to making $ - always remember that... How can you beat them at their own game?? Simple - BUY stocks with EXCELLENT management, a unique and scalable product, and buy them when others either are panicked or are unaware of the potential. Then, hold them thru the frenzy. The ups, the downs, the non-action - just hold - and reevaluate management's ability to execute their business plan at certain key points - quarterly. Do not sell when the stock drops on no news if you believe in the fundamentals and the ability of management to execute. IF you need to sell, sell into strength. IF you do not need to sell - just hold LONG - by that I mean YEARS.... MMs think, and rightly so, that most people who buy OTC stocks are not LONG TERM INVESTORS. They think they are here for a quick buck, and most are - that is why MMs are so successful at manipulating the stock and scaring "investors". If one really goes LONG, that throws the MMs off. If the float is whittled away by real long term investors, the MMs have less leeway to play their games. Then they HAVE to make a more fair market, and they HATE that...
You can play against these people as long as you're a "mo mo" player or a daytrader...
Goodluck and solid investing.
When MMs get caught unaware - when big news hits for an OTC stock - they get flooded with BUY orders. Now MMs make the most $ when the buy and sell orders are EQUAL and MANY - so they get a piece of each one and do not go SHORT. MMs do go long, but not really that long - they are short term traders. They will buy at what they think is cheap, sell for what they think is a good gain, and then short again, drive the price down, cover, and go LONG again.....
So - when MMs get caught in a FLURRY of orders from investors to BUY stock, they fill some and then to protect themselves, they RAISE THE ASK. Ever noticed that it is hard to fill in a moving market?? That is b/c the MMs do NOT want to fill you until the BUYING STOPS - they HAVE to fill some, b/c they HAVE to make a market. But they will fill as little as they can get away with filling until they get a hold of the stock again - and that happens when the price rides up fast and furious. Then, many buyers start to say "well, I'm not gonna chase THIS much - I'll wait for the pullback and get it then". THe buying slows down. Of course, some people still buy - and some, more foolish people, have placed MARKET orders in a fast moving OTC stock. That is EASY MONEY for an MM, and when they see a string of market orders, their eyes light up. What they do is HOLD the Market order - sometimes for 10-15 minutes - all the while raising the ASK with as little order filling at the ask as they can get away with - and raise to where they think there will be some resistance. Then, they fill a TON of market orders at a certain price - but they DO NOT move the ASK up. They try like #### to absorb the buying flurry - and if they are successful, buying starts to taper. Then, they will close the spread to entice sellers - all the while NOT raising the ASK. A few sells come thru, and then they try to trigger some more by BUYING 100 share lots at the bid - WHICH LOOKS LIKE SELLING TO THE PUBLIC. THe public and traders think the run is over, and they start to sell - of course, MMs then do the reverse - they DROP the BID/ASK and try to fill as few orders on the BID as possible until they can walk it down to COVER THEMSELVES!! Then all the orders to SELL at market go thru - often at a SUPPORT LEVEL. Once the MMs get a few shares back and decrease their short position (they may actually even try to go LONG since they know the stock is in a rally), they move it back up, hoping to induce PANIC BUYING from all of those who BOUGHT at the TOP and SOLD in a panic when the stock price dropped immediately after they bought... MMs are sneaky ########. Know their games. Know what they are trying to do - that is, make $ at YOUR EXPENSE. Making a market for them is secondary to making $ - always remember that... How can you beat them at their own game?? Simple - BUY stocks with EXCELLENT management, a unique and scalable product, and buy them when others either are panicked or are unaware of the potential. Then, hold them thru the frenzy. The ups, the downs, the non-action - just hold - and reevaluate management's ability to execute their business plan at certain key points - quarterly. Do not sell when the stock drops on no news if you believe in the fundamentals and the ability of management to execute. IF you need to sell, sell into strength. IF you do not need to sell - just hold LONG - by that I mean YEARS.... MMs think, and rightly so, that most people who buy OTC stocks are not LONG TERM INVESTORS. They think they are here for a quick buck, and most are - that is why MMs are so successful at manipulating the stock and scaring "investors". If one really goes LONG, that throws the MMs off. If the float is whittled away by real long term investors, the MMs have less leeway to play their games. Then they HAVE to make a more fair market, and they HATE that...
You can play against these people as long as you're a "mo mo" player or a daytrader...
Goodluck and solid investing.
