Dislikedbut what is the motivation for an unscrupulous market maker to drive the price into an imbalance?Ignored
imbalance occurred from excess buy or sell orders making it impossible to match the orders of buyers and sellers.
for example, there were some big corporations waiting to sell at certain price level
there was a slow grind upward towards that level.
and they begin to sell.
but due to the big size sell orders, they could not do them at one go
there was a news event or some VVIP said something causing price to drop.
the selling occurred very fast such that only few buyers able to match the sellers.
thus causing a big drop in price and an imbalance.
leaving the big selling orders sitting up there.
later there could be some sellers begin to take profit with some small manipulation driving price up to the imbalance
the bigger selling orders then started to take effect. sometimes still could not be fulfilled completely.
in the case of stock exchange, securities can be borrowed, brought in from reserve to add liquidity (at least happen in my country)
to clear out the excess selling orders.
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ITB - Seeing Orderliness amongst 'Randomness'
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