oh- i WILL be getting to how you avoid getting hurt by mm's, but first you need context, flavour....
so what is NSS? NSS (naked shorting) is the selling of shares you don't actually own, i.e., you are selling "ghost shares", "counterfeit shares", "fraudulent shares".
now the funny thing is, the SEC allows mm's to engage in NSS, but only if they've made good faith "arrangements" to actually borrow the shares from somebody else (like another mm or broker). it sounds like a good system, ideally providing liquidity in the markets. but it absolutely does not work because it's riddled with mm abuse. but why is this important to you as a retail trader? ....
well, remember a little thing called the law of supply and demand? in other words, as demand increases and supply decreases, the price of the item should go up. but mm's use increasing demand to drive price down!!! they do it with NSS- counterfeit shares. they sell shares that don't exist, causing the price to go down! those "good faith arrangements" to borrow actual shares are often just a flimsy nod to the law and the actual shares are never even delivered. if you doubt this, go watch this video- the data comes from academics, PhD's, not some rant-mongers. i started watching and couldn't stop! and it's a long video.
daily, millions of new counterfeit shares hit the market. and a large number of those never gets delivered. these are called "FTD's" (fails to deliver). it's been going on for years, and the effect is cumulative. someday soon, coming to a bank near you, there has to be a balancing of accounts. there has to be a reckoning. that "correction" will make the crash of 1929 look like a hiccup. believe it. having to cover their naked shorts with either real stock or real cash will ruin market maker after market maker, bank after bank, broker after broker.
we're being systematically looted by criminal elements inside the usa and outside the usa (the epicenter of one major NSS scheme was traced to a Moscow ring). watch the video!!
okay- let's move on to how to protect yourself and make a profit in spite of the mm's.
now the funny thing is, the SEC allows mm's to engage in NSS, but only if they've made good faith "arrangements" to actually borrow the shares from somebody else (like another mm or broker). it sounds like a good system, ideally providing liquidity in the markets. but it absolutely does not work because it's riddled with mm abuse. but why is this important to you as a retail trader? ....
well, remember a little thing called the law of supply and demand? in other words, as demand increases and supply decreases, the price of the item should go up. but mm's use increasing demand to drive price down!!! they do it with NSS- counterfeit shares. they sell shares that don't exist, causing the price to go down! those "good faith arrangements" to borrow actual shares are often just a flimsy nod to the law and the actual shares are never even delivered. if you doubt this, go watch this video- the data comes from academics, PhD's, not some rant-mongers. i started watching and couldn't stop! and it's a long video.
daily, millions of new counterfeit shares hit the market. and a large number of those never gets delivered. these are called "FTD's" (fails to deliver). it's been going on for years, and the effect is cumulative. someday soon, coming to a bank near you, there has to be a balancing of accounts. there has to be a reckoning. that "correction" will make the crash of 1929 look like a hiccup. believe it. having to cover their naked shorts with either real stock or real cash will ruin market maker after market maker, bank after bank, broker after broker.
we're being systematically looted by criminal elements inside the usa and outside the usa (the epicenter of one major NSS scheme was traced to a Moscow ring). watch the video!!
okay- let's move on to how to protect yourself and make a profit in spite of the mm's.
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