More Market Makers are Better

I typically like to invest into small cap stocks only if they have at least 10 market makers.

Markets makers are predominantly in the business of trading off your orders and trading off order flow. Contrary to the opinion of masses that has developed over the past few years, market makers are not usually in the business of creating a large short or long position in an OTCBB or Pink Sheet stock that will be sustained over time unless there is an extremely good reason. As one of the smartest traders that I have ever met once said, "If you're wrong, it's financial suicide."

Therefore, more market makers is usually a positive attribute for any small cap stock. More market makers usually create less risk for the market makers. It's the old fashioned game of Hot Potato. If it's too hot, you can pass it on too someone. This on the same line of thinking creates less of a spread (difference between bid and ask) in the stock quote which is usually attractive to most investors. More market makers also creates a more orderly and efficient market.

It's a simple rule. Look for at least 10 market makers in a stock.