Tight and wide spreads: This is another ploy to e

Tight and wide spreads:

This is another ploy to entice sellers. The market maker runs the stock up with a tight spread in a fast market. Then he cools the buying interest by opening or widening the spread. After the buying has dropped, he lowers the offer below the last trade for a small trade. Next he tightens the spread so as to make weak sellers feel they can make a quick profit by selling to him at the bid on the tightened spread. Once the selling begins, the market maker “walks it down” by making small trades on the way down, all the while with tight spreads.

Another tactic is to run the stock up in the morning, shorting along the way and “walking the price down” which is the trader’s terminology for lowering the bids and offers on subsequent small trades. After a few days, buyers are put off or demoralized, volumes dry up and sellers appear, thinking that the price rise is over.