Introduction In financial markets, traders can easily buy or sell assets at any time. But have you ever wondered who ensures this seamless transaction process? The answer is market makers. Market makers are individuals or institutions that continuously engage in buying and selling assets, ensuring liquidity while earning profits from bid-ask spreads. This article explores market-making strategies , their advantages, limitations, and how they contribute to a well-functioning financial market. What is Market Making Strategy? A market-making strategy involves simultaneously buying and selling financial assets to generate liquidity. Market makers purchase an asset at the bid price and sell it at the ask price, profiting from the spread between the two prices. Unlike other trading strategies focused solely on profit-making, market-making prioritizes stabilizing the market while generating profits as a secondary objective. Market-making strategies are commonly used in stock, forex, indices, ...
Market Making Strategy For Market Makers: A Complete Guide