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IS THE STOCK MARKET RIGGED BY MARKET MAKERS?
Well, to be frank...it is and it isn't.
It depends where you are in your trading career. Read on.
Many Traders may tell you that the stock market is not rigged. They'll say that market makers have little to do with price and it's all about bears and bulls - and who has control of price action at that time. Then the'll say something to the tune of, "Millions of trades and Billions of dollars per day change hands on The Stock Exchange. Market Makers don't care about your little trade". That is true. You and your "little trade" mean nothing to them.
What they do care about, is the 10M+ Global Retail Traders who trade like you. We all play by similar trading rules right? You know, "get long on the double bottom." "Get short on a double top," etc.
They want your/our shares. It's called liquidity and it's what "really" makes price action act the way it does, on any given asset and specified time frame. It's complicated, to say the least.
In short, Stock Price-Action is based on highly complicated algorythims, designed specifically to keep as many shares liquid as possible. They do that using known psychological patterns that will entice you to get in to the trade, then fear of loss to get you out of the trade.
As many traders know, Market Makers (who facilitate all trades) make their money on the bid/ask spread when a trade happens. That means that more trades equals more profit for them. More trades is achieved by liquidity, via the price action patterns discussed above, ensuring plenty of assets are available to trade.
That's one of the main reasons that only 10% of traders are consistently profitable. Market Makers manipulate price action to entice you to enter, then capitalize on your fear of loss.
Think about it like this. If you made money every time someone trades, how could you make them trade more? Stop them out and trick them into trading again, right? Today's Artificial Intelligence (AI) Trading Algos are more complex than ever!
Not to over simplify the topic, because high demand on some tickers (NVDA, TSLA, MSFT, AAPL, etc..) is part of the algorythmic equation. News is a huge factor. Earnings are critical, and so on.
So, for professional traders, with years of experience and thousands of hours of Technical Analysis, the stock market is not rigged. This is because we understand what moves price action and what we should expect. For newbies trying to learn what we know, it appears that the stock market is absolutely rigged!
This means that if you don't have solid Technical Analysis Skills and full control over your emotions, you can't possess the ability to "see" what they are doing, you'll lose until you eventually lose for the last time and become what we lovingly refer to as a "90%'er.
Lake Life Trading Company, llc
Lake Murray, South Carolina USA 29036
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