Page 268 - THE MARKET WHISPERER

264 PART 9 - The Trading Platform

are offering since they do not want others reading their intentions. For
example, when I want to sell a quantity of up to 1000 shares, I use a
command known as RESERVE which displays a sale of only 100 shares
even though the amount in actuality is far larger. The buyers, who do
not know they are watching a large quantity seller, buy a small amount
each time, until eventually they buy the entire amount I intended to sell.
What might happen if I displayed an amount of 3000 shares, for example?
Without doubt I would scare away small buyers who would avoid buying,
since they know that if they buy a small quantity, the stock will not move
until a large buyer would come along and purchase all the stocks I am
trying to sell.

Sometimes, when you hold a stock whose price has stopped at a certain
position and refuses to continue trending up when you are long, or refuses
to trend down when you are short, try to discover in the MMID column
who the seller is, insisting on adding quantities, or in the case of a short,
who the buyer is that insists on renewing quantities. The phenomenon is
very common in cases when the stock is trending up and reaches a round
number, and heavy sellers can often be found who are not interested in
revealing the true quantity they are offering for sale.

Market depth exercises
The opposite situation occurs when large scale market makers who

have accumulated shares may wish to display a large quantity for sale,
and which they have no intention of selling. They hope that the large
quantity will deter potential buyers and even translate into seller panic.
They hope that displaying a large amount will reduce the stock price and
make it easier for them to accrue more for a cheaper price. This is also
why, sometimes, you will find the same market makers on both sides of the
transaction: on one hand, the market maker will sell, or at least display like
a large seller, and on the other hand, the market maker will buy.

Until a few years ago, market depth manipulations using the Level II are
were a common phenomenon. Many traders tried to decipher the nature
of market maker behavior, and act according to what they felt the market
maker was about to do. This was known as “find the bull”: traders would
spend entire days seeking the bull that would take them to their promised
land. Thick books were written on this activity, and thousands of traders
tried following market makers as a way of making profits. Over time, the
methods by which market makers could display or hide orders became