Replies (14)

Sikto's avatar
Sikto 2 years ago
Kind of like how babies are made. Two people get together (in this case institutions) and provide a way of entering and exiting a market, without any friction, and a ton of liquidity. :)
twentyone's avatar
twentyone 2 years ago
It’s an illusion of made up rules and definitions
IIUC, when someone “makes a market” they make a credible offer to buy or sell something, presumably more than once. So in The Big Short, when Jared says to Vinny, “you want me to make you a market?” what he’s asking is whether Vinny wants to buy what Jared is trying to sell for the first time (credit default swaps). In an exchange context, when you place a limit order to buy or sell, you’re called the market “maker”. Your counterpart, who fills the order, is the market “taker”.
yes in trader bro speak market etymology: > The god Mercurius was probably the god of exchange… the god's name was borrowed from Etruscan; in principle, the same is possible for the stem *merk- altogether… > early 12c., "a meeting at a fixed time for buying and selling livestock and provisions, an occasion on which goods are publicly exposed for sale and buyers assemble to purchase
A market is made by use of order books. On exchange there are people who bid and ask. Bid means they place a bid to buy at x price. Ask is a sell at Y price. Since there's a disparity between the bids and ask, those orders sit on the books until someone takes the other side. The intersection of the bids/asks is the spot price. A market is "made" when a market maker places bids/asks onto the order books. They literally create a market for purchases or sales by placing orders on the order book. Usually a market maker is employed by the exchange to keep volatility in check. The market maker will also take the opposite side of a "market buy/sell" (purchase/sell at spot price).
In regards of binary intelligence, creating market awareness was the first step towards market making, as something truly new under the sun. So how do you create awareness of something believed fictional yet to create a market for? #mainvolume image