Written by: @bc1qDave

Before understanding market makers (MM), one might think that MMs are dominating the world; after understanding MMs, one will find that there are many unspeakable difficulties. Due to business reasons, I have come into contact with some MM-related matters, so I'll ramble a bit about market makers. The following content is purely imaginative; I don’t know anything at all.

1: MM trading teams basically cannot disclose any information

This is why I often envy colleagues on the BD side, confidently saying to everyone: "I am an MM." Traders can only feel wronged: "Uh, well... we are doing secondary strategies."

For example, during meetings, if everyone hears some financing information at that time, please think critically. It is basically impossible for MMs to report real figures externally. The logic is simple: suppose I know how much you financed for this project; I only need to invest $100,000 more than you to completely take you out.

Control of supply, financing, project cycles, and even project names are all confidential information that cannot be disclosed. As for the pace of driving the market, it is the most confidential of secrets, known only to a few core individuals.

Loyalty is not absolute; it is absolutely disloyalty. This is an organizational test.

2: Acting the biggest shot, taking the most hits

The trader is at odds with the entire market. The entire market includes: retail investors, professional traders, quantitative arbitrage teams, market-making bots (provided by exchanges), internal insider traders, exchange risk control, and industry colleagues who know information (everyone often puts pressure on each other, which can be seen as a form of competition and cooperation).

Quantitative arbitrage only earns money from statistical price differences, professional traders only earn money from the main force's rally, which is then handed over to retail investors. The trader's task is to cut out the entire market, taking on all from above.

3: MM is not a get-out-of-jail-free card; having a firm does not mean one can be reckless

I thought this point should be clarified for everyone. The randomness in the market is too great; in real operations, situations where one might “try pulling it up” can really occur. For the firm itself, it is definitely safe. The firm naturally has infinite backup and the largest cards on the field; no matter what, they won’t bleed too much. However, if retail investors want to tag along, they might end up getting a layer of skin taken off.

In the process of trading, the firm cannot guarantee how much this wave will explode or that every K-line is planned. Everyone must remember to have their own trading plan and avoid position imbalance. I had a personal lesson on this back in October last year.

Market making, quantitative trading, subjective trading, and investing are four completely different fields.

Once again, I disclaim: I don’t know anything; this is purely for trading study. Big players, please guide me.

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