We have lots of experienced traders on MoneyAM who would be glad to help if you have any trading questions.

Good question.It is strange.
rgds aj

Any of the people "in the know" like to answer my question or are the brokers just ignoring the prices we see on L2!

Fortune Oil - FTO

I have been monitoring the share volumes of Fortune Oil over the last 3 to 4 weeks and there is a three to one bias in favour of buyers on most days yet the shares tend to fall, why is this surely such positive demand should be pushing the price up? Can anyone explain what is happening?

longinvest - take a look at Crocs post no: 260 and my post No: 289.

EMail sent to me this morning with no reply address

"Hello, I read often your articles and it sounds like I can ask a question about trading: i am very new in trading but what mystify me is that some days they say shares are mainly a sell day and other days they say everybodey is buying- that does not make sense to me because if somebody sells somebody else buy which is the same? Cheers sconra"

Yes of course you are right! But it can give some indication to market pressure / sentiment.
D.

I found this on another BB. Very interesting but do not know who the author is. Explains alot!

MARKET MAKER SPEAKS OUT: Ways of a Market Maker

I was an OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade.

They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks.

So they have to rely on what's known as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM.

If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to that MM who performed (his life blood). This will go on until he "fails" to perform and so on.

Contrary to popular opinion the "Big" firms Do NOT neccessarily go to the "Low Offer" to fill a buy order (Or high bid for a sell). They "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more.

As a wholesaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses.

With the above groundwork laid, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision.

Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks.

But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever".

Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is).

Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.

Some ways MM's entice sellers; Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread.

Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon.

Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over.

Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular.

This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."

Croc

Can you give us one or two pointers on how trading in the daily auction works. Are there any good articles or references that you have seen? Is it true that you make most of your gains in the auction? I understand that you may not want to give away your secrets to all and sundry!

Regards
gk

Good post leggins!

Gallick
There is very little information around on using auctions. I was about to put an article together for SnappyTrader on so leave it with me and I will post it ASAP
D.

Hi,
Where can I find the Nikkei Index futures? Thanks to whoever replies.
sw

I think you can get them on www.futuresource.com

Croc,

You mention your articles above, Where are they located?

Thanks

Theres a link to crocs page on the traders thread.

Do you have any links to some good Tick and Trin charts? Ftse if pos as well as the tiki for the dow?

Thanks

auction explanation:

http://boards.fool.co.uk/Message.asp?mid=8460428

Berometer is 32long ..Put your targets @ 4280 mkt is short ..

CAN YOU PLEASE EXPLAIN TO ME WHAT IS GOING TO HAPPEN TO MY 500 I HAVE INVESTED WITH mAYFLOWER CORP PLEASE! THEY HAVE GONE INTO RECEIVERSHIP AND IT LOOKS AS THOUGH "MELROSE" AIN'T JUMPIN IN, SO ANY EXPLANATION WOULD BE APPRECEIATED!


THANKS THE CASHCAPTAIN!

You don't need to 'SHOUT'ie use High case'
Ref Mayflower, think you'll need to replace your nickname!

Could someone please explain the meaning and implication of the following.

Does it mean that the company wants to issue more shares? If it does mean this what is the effect on shares already held? Will they be devalued by dilution?
Thanks in anticipation

B2B


Patientline plc ('the Company')
Additional Listing

Application has today been made to the UK Listing Authority and the London Stock
Exchange for a total of 42,425 ordinary shares of 5p each in the Company
('Ordinary Shares') to be admitted to the Official List and to trading on the
London Stock Exchange's main market. Of the 42,425 Ordinary Shares being issued,
40,231 Ordinary Shares are being issued pursuant to the exercise of options,
with the remaining 2,194 being issued under the Share Purchase Agreement for
TVTEL BV dated 1 December 2001.

Admission of all the Ordinary Shares is expected to become effective on 8 April
2004.

2 April 2004

cashcaptain - You will find this at "News" on the 1st

LONDON (AFX) - The appointment of administrators at vehicle manufacturer Mayflower Corp PLC has scared off bid interest from Melrose PLC as the AIM-listed cash shell said it no longer wants to pursue acquisition talks.

'Melrose reserves its position to make an offer for the shares in the event that Mayflower shares are re-listed,' it added.

Mayflower's financial crisis has been well documented and yesterday it called in the administrators after it was unable to persuade its lenders to give it a stay of execution.

It's self-explanatory about Melrose. At the end of the day what happens is dependant on the administrator. Worse case - your money is gone. As a shareholder you are at the end of the queque when it comes to being paid.

brain2brain - In theory it could do what you ask, but the amounts are quite small so I doubt it.