What is market maker?

[jackytam]

Hi,

I am a fresh graduate in London right now. An electrical engineering degree, MEng - 4 year degree. Looking to get a trading job. Did a trading internship in IB b4. But didnt get the offer. (thanks to the current climate)

Just wondering what is the difference between market maker in prop firm and market maker in IBs?

prop firm i mean things like IMC...

So who are the client for the market maker in prop firm? As I understand, there are plenty of sales in IB. So the market maker in IB are just pricing for the sales mainly.

Do they just create liquidity to the market to the clients (prop firm - who are the clients? brokers? i know IB has instiutional clients) and maintain the risk after creating the flow?

So not much risk-taking? mainly on maintaining a good risk-reward ratio and capture the spreads..., right?

In prop trading firm, do they pay you salary in a role of market maker? if so, how much do you think a firm like IMC or any firm would pay?

I got many questions.... BIG THANKS in advance

 

[glyder]

Hi,

I am a fresh graduate in London right now. An electrical engineering degree, MEng - 4 year degree. Looking to get a trading job. Did a trading internship in IB b4. But didnt get the offer. (thanks to the current climate)

Just wondering what is the difference between market maker in prop firm and market maker in IBs?

prop firm i mean things like IMC...

So who are the client for the market maker in prop firm? As I understand, there are plenty of sales in IB. So the market maker in IB are just pricing for the sales mainly.

Do they just create liquidity to the market to the clients (prop firm - who are the clients? brokers? i know IB has instiutional clients) and maintain the risk after creating the flow?

So not much risk-taking? mainly on maintaining a good risk-reward ratio and capture the spreads..., right?

In prop trading firm, do they pay you salary in a role of market maker? if so, how much do you think a firm like IMC or any firm would pay?

I got many questions.... BIG THANKS in advance

try your questions on investopedia
Market Maker

 

[jackytam]

as my understanding, prop trader means traders who invest on the firm behalf whereas market maker is to provide liquidity to the clients of the firm. So the market maker are taking the position oppose to the clients, right? the profit that market maker is making from investor crossing their spread, buy from higher than theoretical value that the trader's model or sell at a lower than theoretical value.

While prop traders make profit from taking a position (long/short) and speculate the market.

correct me if i am wrong.

But I want to know is there any difference in the nature of work between market maker in prop trading firm like IMC, Mako and IB like GS, DB...?

cheers

 

[Skill Leverage]

To me, making a market would describe periods of low volume where I have no particular bias and am moving between bids and offers; for example over the lunch hours you might be observing the ladder and buy 63s, then turn around and sell 65s; then you could sell 63s and buy 62s... Obviously we're talking about meaningless size relative to institutions, that said you are still providing liquidity by continually accepting both bids and offers; in other words as a prop trader you don't need to have a 'position' in the way you have a long/short view on the market and build a trade accordingly - there are many ways a prop trader can make their money. I would also add that by definition any trader is providing liquidity to the market every time they buy or sell a contract, so you don't need to make that distinction.

That's what I'd say as an intraday trader, but I'm fairly new to this game so don't put too much weight behind my opinion.

SL