Registered: Apr 2011
05-27-12 12:39 PM
Quote from Dura:
How does MM know where to add depth and liquidity?
If we are talking about equity market makers, they generally run an automated strategy. They are constantly bidding and offering somewhere and hedging with stocks that are correlated. So if they buy to much in related equities on 100 different symbols, they might drop their bids in everything until they sell enough to be in balance. They are trying to lock in rebates and fractions of a point on millions of trades. Some MM might pick sides. Lean long, lean short. It would depend on their strategy.
The direct answer to your question. They bid and offer all day somewhere.