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07 · You are the market maker

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Markets, lesson 7

You are the market maker

Quote a bid and an ask, and meet traders who know more than you.

You know the order book: bids and asks waiting at prices, and the spread between them. So far you've sent the orders. Now you're the one waiting.

Part 1. Quote GULL

You're the market maker for GULL, a practice stock. You think it's worth 100. Set a price you'll buy at (your bid) and a price you'll sell at (your ask), and twenty traders will come to you.

Make a market in GULLLive

The traders who knew where GULL was going all traded the same way, on the side of your quote that was about to be wrong. You couldn't see who they were. You found out when the price moved.

Part 2. Who picked you off

Keep going with Pro

You've done the first part. Pro opens the rest of this lesson, and every other one.

Still to come
  1. Who picked you off
  2. A worked problem
  3. The same thing, for real
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Next lessonMake a market on a numberThe interview game: fair value in the middle, half the spread per trade. Start lesson 8

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