Some interesting read on Market Makers in NSE India
http://www.smeipolisting.com/uploads/6aug-2012.pdf
http://www.smeipolisting.com/uploads/6aug-2012.pdf
NIFTY Options Trading by RAJ
- Thread starter healthraj
- Start date
- Tags nifty options chain raj oat
Unofficial version of the Market Maker --> Because Market Maker is also existing to make some money and NOT THERE TO DO SERVICE
We know that a market maker "makes" the market -- holding buy and sell orders to be completed in his/her "book" (which is now a computerized program and not a real written list)
Market makers raise the price based on demand and supply (supposedly) and lower it accordingly, but in reality they will raise a price higher and higher, borrowing shares if they cannot cover the trades through their own inventory ---- NOW, once they have raised the price to RESISTANCE (and often based on the time of day) they will immediately switch to SHORTING the price, selling their "borrowed" shares first and pushing the price DOWN. the retail trading public, seeing the price drop, immediately starts selling their shares, which are grabbed by the SHORTS, the mm included !
As the price drops, the shorts pick up more and more of the longs desperate selling getting more and more shares at a cheaper and cheaper price.
Through all this, the mms have RETURNED the shares they borrowed to sell long during the run up, and have now made money by shorting them on the way down.
At some point support is hit (depending completely on Market Maker and the time of day) and the whole silly game begins again, with the mm's driving the price UP, retail traders hoping on the bandwagon, and the price moves higher and higher as the mm's simply move it up.
NOW, after the fact for most news, you can observe how the ups and down cycles are leading towards a trend --- if the "highs" are higher each time one is reached, we are in an UPTREND, and reverse that for a downtrend and how THAT is decided is a story for another day, but it IS decided !
We have all been told its supply and demand, and while (depending exactly how you use language) it has "something" to do with it, its reality is one of a market that is being manipulated constantly, which is EXACTLY how each and every trading market works !
If this were not so, NO ONE could predict what would happen at noon, but since good traders can and do every day, it follows that they already know what is going to happen.
But Market Makers can also loose money if there are nobody to Participate in the Market they created... If the retail traders not participating then MMs have to once again Buy/Sell.
OBSERVE your market, and you will soon understand also !
We know that a market maker "makes" the market -- holding buy and sell orders to be completed in his/her "book" (which is now a computerized program and not a real written list)
Market makers raise the price based on demand and supply (supposedly) and lower it accordingly, but in reality they will raise a price higher and higher, borrowing shares if they cannot cover the trades through their own inventory ---- NOW, once they have raised the price to RESISTANCE (and often based on the time of day) they will immediately switch to SHORTING the price, selling their "borrowed" shares first and pushing the price DOWN. the retail trading public, seeing the price drop, immediately starts selling their shares, which are grabbed by the SHORTS, the mm included !
As the price drops, the shorts pick up more and more of the longs desperate selling getting more and more shares at a cheaper and cheaper price.
Through all this, the mms have RETURNED the shares they borrowed to sell long during the run up, and have now made money by shorting them on the way down.
At some point support is hit (depending completely on Market Maker and the time of day) and the whole silly game begins again, with the mm's driving the price UP, retail traders hoping on the bandwagon, and the price moves higher and higher as the mm's simply move it up.
NOW, after the fact for most news, you can observe how the ups and down cycles are leading towards a trend --- if the "highs" are higher each time one is reached, we are in an UPTREND, and reverse that for a downtrend and how THAT is decided is a story for another day, but it IS decided !
We have all been told its supply and demand, and while (depending exactly how you use language) it has "something" to do with it, its reality is one of a market that is being manipulated constantly, which is EXACTLY how each and every trading market works !
If this were not so, NO ONE could predict what would happen at noon, but since good traders can and do every day, it follows that they already know what is going to happen.
But Market Makers can also loose money if there are nobody to Participate in the Market they created... If the retail traders not participating then MMs have to once again Buy/Sell.
OBSERVE your market, and you will soon understand also !
The NSEindia.com link
http://www.nseindia.com/emerge/participants/content/sme_mm_rolesresp.htm
List of Market Makers
http://www.nseindia.com/emerge/participants/content/sme_mm_list.htm
http://www.nseindia.com/emerge/participants/content/sme_mm_rolesresp.htm
List of Market Makers
http://www.nseindia.com/emerge/participants/content/sme_mm_list.htm
In fact, most of them have taken long (around 6000) and hoping for a reversal, biting their finger nails (you know I lost about a centimeter of my thumb 
finger) sitting over a pile of loss
finger) sitting over a pile of loss
finger)Interesting. Yes, I was a little worked up about the Nifty premium being as high as 44 since the start of Aug series. I concluded that this was because of long being carried forward from July series.
Now, the premiums have come down to 9. All those stuck longs have used every rise to get out... yet Nifty keeps rising, little by little. It is only when a "critical mass" of longs are out, and gone short, will it make sense for the market makers to drive the Index up.
Lol... (you know I lost about a centimeter of my thumb finger)
Interesting. Yes, I was a little worked up about the Nifty premium being as high as 44 since the start of Aug series. I concluded that this was because of long being carried forward from July series.
Now, the premiums have come down to 9. All those stuck longs have used every rise to get out... yet Nifty keeps rising, little by little. It is only when a "critical mass" of longs are out, and gone short, will it make sense for the market makers to drive the Index up.
finger)Interesting. Yes, I was a little worked up about the Nifty premium being as high as 44 since the start of Aug series. I concluded that this was because of long being carried forward from July series.
Now, the premiums have come down to 9. All those stuck longs have used every rise to get out... yet Nifty keeps rising, little by little. It is only when a "critical mass" of longs are out, and gone short, will it make sense for the market makers to drive the Index up.
:lol:You still have 11 inches of fingers length left. Now lets move on with less problems
:lol::lol:First time seeing the Rules (Roles) and Responsibilities of a Market Maker.
I always believe that "Rules are created to be broken" because Rules in court of Law will act in words and not in Spirit.
So now I have to figure out how these Rules can be broken by the Market maker.
One obvious rule which is often broken by the Market Maker is that "Market Maker does not always provide the Bid/ Ask as per the Real Supply Demand". They take the stock to a Level which is called the Support or Resistance, which is decided by the Market Maker?
So now my basic question, is why should Market Maker decide the Support or Resistance area? They just need to supply for the demand ....
So the other flaw here is that Market Makers does not need to have the stock in their inventory... I mean they can borrow... Borrow here means some kind of Artificial inventory... which is the main reason for Speculation.
The second question is that why would the stock fall suddenly or go up suddenly (GAP UP or GAP DOWN)? The Market Makers if they want can control this. In other words Market makers are wantedly creating this panic situation... All because they want to decide (or have already decided) which way the Stock or Market should go, which is not the function of a Market Maker. But unfortunately there are no rules which can govern this...
End of the day we are at the Mercy of a Market Maker
I always believe that "Rules are created to be broken" because Rules in court of Law will act in words and not in Spirit.
So now I have to figure out how these Rules can be broken by the Market maker.
One obvious rule which is often broken by the Market Maker is that "Market Maker does not always provide the Bid/ Ask as per the Real Supply Demand". They take the stock to a Level which is called the Support or Resistance, which is decided by the Market Maker?
So now my basic question, is why should Market Maker decide the Support or Resistance area? They just need to supply for the demand ....
So the other flaw here is that Market Makers does not need to have the stock in their inventory... I mean they can borrow... Borrow here means some kind of Artificial inventory... which is the main reason for Speculation.
The second question is that why would the stock fall suddenly or go up suddenly (GAP UP or GAP DOWN)? The Market Makers if they want can control this. In other words Market makers are wantedly creating this panic situation... All because they want to decide (or have already decided) which way the Stock or Market should go, which is not the function of a Market Maker. But unfortunately there are no rules which can govern this...
End of the day we are at the Mercy of a Market Maker
Similar threads
-
-
-
Fall in volume of trading in Nifty-50 call options in 2016?
- Started by srikanthyadav444p
- Replies: 0
-
Too much risk in trading BankNifty or its options. Views welcome.- Started by kingsmasher1
- Replies: 10
-
