Blog Posts

Is It Possible for Retail Traders to Become Market Makers?

It’s technically possible for small traders to become market makers. Market making is not limited by the size of the entity but by its ability to comply with the rules and provide continuous liquidity to the market. Nonetheless, there are significant challenges and it requires adherence to specific regulatory, financial, and technological requirements   Key […]

11+ Options Strategies for Synthetic Leverage (Cost-Effective)

Options strategies are often used for synthetic leverage. They help us get exposure to the underlying asset without having to transact in the underlying market. Traders use options to, for example: have a customized and/or defined-risk trade structure help them leverage their positions – i.e., get exposure to a higher amount of notional than would […]

Market Makers & Relationships with Exchanges, Brokers & Data Providers

Can a market maker own an exchange, broker, or data provider? There are definite advantages for a market maker to own an exchange, data provider, or broker. But there are important considerations and potential conflicts of interest to understand.   Advantages of Market Maker Integration with Exchanges, Brokers & Data Providers Information A market maker […]

How Market Makers Choose Their Markets & Strategies

We look at how market makers choose their markets and strategies.   Key Takeaways – How Market Makers Choose Their Markets & Strategies Liquidity and Volume Market makers select markets with high liquidity and volume to ensure enough trading activity for tight bid-ask spreads and minimal holding times for securities. Risk Management They use sophisticated […]

Largest Market Makers

Market makers have an important role in financial markets by providing liquidity and facilitating trading by buying and selling securities from their own inventory. They stand ready to buy or sell at publicly quoted prices, which helps with smoother market operations. The largest market makers typically operate in various segments, including equities, fixed income, foreign […]

S&P 500 – Average Percent Gain in Up Year vs. Down Year

Based on historical data for the S&P 500 index going back to 1928: In up years (when the index has a positive annual return): The average annual percentage gain is around +20%. Up years occur around 72% of the time. In down years (when the index has a negative annual return): The average annual percentage […]

Margin Rates Meaning

Margin rates refer to the interest rate charged by brokers when traders or investors borrow money to buy securities (such as stocks or bonds) on margin. Essentially, buying on margin allows investors to leverage their purchasing power by using borrowed funds to increase their potential investment return. The margin rate is important because it determines […]

Most Successful Penny Stocks In History

The term “penny stocks” refers to stocks trading at a low price per share, typically under $5, and often outside of major market exchanges (sometimes the pink sheets). These stocks are considered highly speculative due to their low price, small market capitalization, and limited following and disclosure. However, several penny stocks have defied the odds […]

Blow-Off Top

A blow-off top refers to a chart pattern that indicates a rapid and significant increase in a security or asset’s price and trading volume, typically followed by a similarly sharp decline. This pattern is typically associated with the climax of a bullish trend, where prices surge to unsustainable levels before succumbing to a sharp reversal. […]

Book Skew (Quantitative Trading)

Book skew is a concept derived from the market microstructure that quantitatively measures the imbalance between the buy and sell sides of the order book in financial markets. Specifically, it refers to the discrepancy between the resting bid depth (vb​) and the resting ask depth (va​) at the top of the order book. This discrepancy […]

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