Reference primer for The Story, which argues that Momentum should become the market maker for this market. This page defines the term precisely, because the mechanism is the point.
What a market maker really is. In any market, buyers and sellers almost never show up at the same instant wanting the exact opposite thing. If you had to wait for a perfect counterparty, markets would be slow, thin, and terrifying to participate in. So a market maker stands in the middle and quotes both sides continuously — willing to buy, willing to sell, all the time — which lets anyone transact now instead of waiting. In between, it carries the mismatch: the timing gap, the inventory, the risk that the other side hasn't shown up yet. It gets paid a spread for doing it. The market only feels liquid and safe because someone is standing in the middle making it so.
Strategy Notebook
Reference primer for The Story, which argues that Momentum should become the market maker for this market. This page defines the term precisely, because the mechanism is the point.
What a market maker really is. In any market, buyers and sellers almost never show up at the same instant wanting the exact opposite thing. If you had to wait for a perfect counterparty, markets would be slow, thin, and terrifying to participate in. So a market maker stands in the middle and quotes both sides continuously — willing to buy, willing to sell, all the time — which lets anyone transact now instead of waiting. In between, it carries the mismatch: the timing gap, the inventory, the risk that the other side hasn't shown up yet. It gets paid a spread for doing it. The market only feels liquid and safe because someone is standing in the middle making it so.