It all began on a brutally cold February day in 1993. I had interviewed multiple times at a small firm and finally got word from the head of the company, I was hired. At the time the word market maker or bid/ask were as foreign to me as German, French or Spanish. However, being hired on Wall Street meant money and clout. I could barely contain my excitement.
It is important to remember that this was a time when things were very different. Wall Street was a club of the elite. There were no computers pushing orders through using ECN’s. It was big boys ruling the small. I did not have to know one thing on technical analysis or fundamental analysis, I just had understand my level II and have connections.
Certain market makers had reputations. What I mean by this is that market maker XYZ would be known for being long stocks and market maker ABC would be known for shorting stocks. As a market maker you would know this and seeing that market maker on the bid or the ask would alert you to the direction that stock was going. The direction of a stock was determined and is determined by the amount of money forcing it in a certain direction. Those market markers would use their hundreds of millions to force a stock in a particular direction.