So, I've been wondering about this for a while, but how do market makers like Knight determine fair value in equities? How do they decide where to bid-ask and how wide the spread should be? How do market makers decide where a price is cheap? Obviously this is pretty valuable information for any trader. Anyone have any experience on market making firms like Getco or Knight? How do they determine this? I worked as a prop trader for 3 years whose focus was on short-term inefficiencies in equities and ETFs. I am currently trying to transition into fundamental-driven trades and longer time horizon trades. If anyone would like to discuss over PM, feel free. Thanks. I am not asking for proprietary information, I just want an idea of how market makers do their job and determine fair value. If a price drops below this fair value, how much do market makers buy? How far away? How much?