Market Making - How to start

From fixed distance to simulating LOB dynamics.

In the previous article we looked at TWAP and VWAP and learned why those 2 indicators are extremely important in financial markets.

In this article we are gonna look at a couple of different market making models, run some simulations, learn about adverse selection, every market makers biggest fear and more!

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Table of Content

1. Fixed Distance MM

2. Managing Inventory

3. Adverse Selection

4. Market Microstructure

5. EV Maximization

6. Final Remarks