What's a good way to start learning how market-making works?

K

Kovacs

What does it take to become a successful market-maker? What kind of skills and knowledge does one need? I'm specifically looking at equity market-making with no options.
 
Think of market maker as the hub of a wheel

One side of the wheel is buyers....., the other side sellers

Wheel becomes unbalanced – MM brings it back into balance

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What you need to be one – lot of money..., and the ability to carry inventory (stock either long or short) for a period of time

Although the goal is to end each day net neutral



No clue how to actually become one


RN
 
Quote from Redneck:


No clue how to actually become one
More...

Seek to be employed by investment banks?

Doesn't a market maker require some Series-X exam qualifications?


As an individual, we can play market maker to buy on bid and sell on ask. But we wouldn't have access to level-3 and order flows.
 
Technically they are not traders at all – simply there to ensure equilibrium between buyers and sellers exists at all times…


Having said that…..

They see both sides of the market…. They cut deals with big players…. And, as we all know, they do trade their own accounts (rather their firm's account)


Great work if you can get it

RN
 
Side question: How much continuous probability is there in quantitative trading (or is it mostly discrete)?

And will learning time series analysis benefit?
 
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