If the market maker wants to ensure the smooth progress of the stock price rally, they need to do a lot of preparation work, such as studying the timing of the rally and researching ways to deal with retail investors who lack confidence based on the overall trend. Whether it is suitable to boost the stock price on that day requires necessary preparation work - trial trading.
The tricks used by market makers in trial trading are often a combination of reality and illusion. Sometimes they want to rise before falling, and sometimes they take a step back. The trend is irregular, making it difficult for investors to distinguish.
1. The main purpose of the banker's trial session
Normally, the banker's trial trading has the following three main purposes:
Test the stability of the chips and determine if it is time to raise them;
Check if there are already other market makers in the market to avoid any potential conflicts;
Determine whether to raise the suction or suppress the suction.
Generally speaking, market makers will observe market reactions by actively placing buy or sell orders or raising stock prices at the opening, in order to determine whether to raise, wash, protect, or sell.
2. The tricks of the banker's trial trading
Usually, market makers use the following tactics during trial trading:
(1) Volume increases and price decreases at the opening
In order to test the level of selling pressure on the day, the market maker will throw out a chip at the opening, deliberately lowering the stock price. If there is a subsequent decline that exceeds the market maker's expectations and the trading volume increases, it indicates that the selling pressure on the day is relatively high, and the reluctance of retail investors to sell is relatively light. If the market maker is optimistic about the future and has already absorbed a certain amount of chips, they will give up the idea of raising on the same day and switch to continuing to collect chips or washing up the market; If the market maker is not optimistic about the future, they may first raise the stock price and then sell their holdings, and then go short in the late trading session.
(2) Double increase in quantity and price at opening
Market makers usually make very strong opening prices to test individual investors' willingness to chase higher prices. If investors are bullish on the future and actively buy, it will show a trend of increasing bid volume. Faced with such strong popularity and a strong desire to chase higher prices, market makers will basically raise the stock price.
(3) Double drop in quantity and price at opening
In order to test the willingness of retail investors to hold shares, market makers usually sell a low price chip at the opening, and then the stock price will slowly decline without increasing the retracement range, and the trading volume will also shrink. This situation indicates that retail investors have a strong reluctance to sell their holdings. If the market maker is not optimistic about the future market, they are likely to choose to raise the price before shipping on the same day; If the market maker is optimistic about the future market trend, they will choose to take advantage of it to boost the stock price.
(4) Price reduction and price increase at the opening
After the opening of the market, the market makers first raise the stock price, but the willingness of individual investors to chase after the rise is not very strong, showing a trend of increasing bids and decreasing volumes. At this point, it will become very difficult for the market maker to raise the stock price, and funding problems are also likely to arise. Therefore, if the market maker is not optimistic about the future, they may reverse their position and go short; And the banker who has just absorbed the chips may only defend and not attack, waiting for a better opportunity to rise.
(5) During the trading session, the volume increased while the price increased, and the volume decreased while the price decreased
By analyzing the relationship between volume and price during trading, the market maker can predict the psychology of individual investors chasing after the rise instead of killing the fall. The volume increases and the price decreases during trading, and it remains above the closing price of the previous trading day throughout the day, showing obvious strong market characteristics. In view of this, market makers usually launch strong attacks in the future, making quick draws to close and block short positions, thereby stimulating buying sentiment for the next trading day.
(6) During the trading session, the amount of price increase and decrease decreased, while the amount of price decrease increased
Based on the changes in the volume price relationship during the trading session, the market makers have learned that retail investors are eager to sell their holdings and have a weak willingness to chase higher prices. The market shows a contradictory trend of rising prices and shrinking volumes, while falling prices and increasing volumes. Moreover, the price has always fluctuated below the closing price of the previous trading day, and the market trend is extremely weak. If there has been a significant increase but the market outlook is not optimistic, the market maker is likely to create favorable sales. If the banker does not collect enough chips and is favored in the future market, it will suppress purchases; If the market outlook is optimistic and the banker has already absorbed enough chips, then the banker can only take a defensive stance and wait for the opportunity.