Level II

[Tau44]

I have a question, i made up a scenarioy

stock xyz

bid .002 ask.003

if you look at the level ii on this stock.

bid ask
.002 .003
.002 .004
.001 .006
.0009 .006

Why would any one put a bid price of a .0009 when the stock is selling for
.002 is that a limit sell order possible where someone isn't infront of there computer all day and if the price got that cheap they would sell..

confused......

[CatFish]

ok sorry just saw this post. the bid/ask is not where someone is trying to buy and sell. remember in the penny market you buy and sell to market makers. the bid is the maximum a market maker will pay for your shares. (most instances you can sometimes sell at the as or buy at the bid) the ask is the price they will sell you shares if you want them. (agian sometimes you can buy at the bid) the market makers are in this to make money just like you and me. i know it is not fair but it is how the penny market works. in your example the market maker will buy shares people are selling all day for .0009 however he will not sell them unless he makes a profit selling them for .006.

on big board stocks the bid and ask is where actual people have shares for sell or trying to buy. not the market makers

to add to this if the market makers think a stock might run they will buy a big stock pile of shares of xyz to sell when it runs to maximize their profits. best way to look at it is they are doing the same thing as me and you and that is trying to make some green

[greencat]

Let's say a stock rises 5% or more during the opening and there's no news about it. Typically, the stock will fall off after 30 minutes of trading. Why? Market makers may be trying to open the stock at an artificially high price to sell off excess inventory they've acquired the day before. However, if the stock doesn't fall after 30 minutes of trading, it's liable to continue rising for the rest of the day.

Post-opening selling:

The opposite of the above strategy. When a stock opens lower on no news, it could be that sell orders from nervous investors have piled up since the close of trading the day' before. Sometimes market makers open the stock artificially low, to draw in more panic sellers. This allows them to accumulate shares, because market makers as a rule buy on price declines and sell on price increases. After 30 minutes, the stock usually recovers in price and normal trading begins. The market makers profit by selling the inventory they've accumulated at the lower price. However, if the stock continues to drift lower after 30 minutes, chances are it'll decline more during the course of the day.

Using L2 and last trade often I am able to determine what the market makers are trying to do. Alpha trade is a great tool I use doing this. But, unless the stock has a great technical set-up or a forward looking event I am normally shooting for 20% profit.

[CaptD]

So what happens when a penny stock has a BA (Bid Ask) large spread and it does not "move" for a while? Is this an indication that the previous sell off (or buying) has ended and the stock is poised to "SPRINGBACK" (my word) to it's previous position?

[greencat]

Originally Posted by CaptD

So what happens when a penny stock has a BA (Bid Ask) large spread and it does not "move" for a while? Is this an indication that the previous sell off (or buying) has ended and the stock is poised to "SPRINGBACK" (my word) to it's previous position?

This usually happens with a low volume stock or a stock with a low float. If you want to get into a stock with a big spread but your price in just below the bid. Have patience and let it sit. Example Bid .051 Ask .070 I will put my bid in at .052 or .053