What is a Market Maker?

A market maker refers to an independent securities operation legal person with certain strength and credibility as a franchise dealer in the securities market, which continuously reports to the public investors the buying and selling prices of certain specific securities (that is, two-way quotes), It accepts the buying and selling requirements of public investors, and uses its own funds and securities to conduct securities transactions with investors. Buyers and sellers do not need to wait for the counterparty to appear, as long as a market maker comes forward to assume the counterparty, the transaction can be concluded.

Market maker

-Keep reaching specific saves

For market makers

The real market maker market should include two

because

If this matter is not profitable, no one will do it. The stable profit is the spread. Market makers that accept buying and selling at the same time, because at the same time, there is a certain gap between the bid and offer prices. Of course, this gap is generally fixed, but there is also the possibility of uncertainty.

for example

Assume that a market maker A is a globally standardized pencil. (Assuming that all people use this kind of pencil) The quote is given by the market maker. Asking price, two-way quote (relative to investors). Make the simplest assumption. The price of this pencil is 1 yuan, and the price of 1 yuan is divided into the purchase price, which means that at this moment all buyers who buy pencils will buy at 1.01 yuan, and all those who sell pencils to market makers will sell at 1 yuan Out. (The spread between 1.01 and 1 is the spread, and the point is the base point. If the minimum quote is 1 cent, then the fluctuation of 1 cent is the fluctuation of a base point). Spread means the difference of a few basis points. Popular understanding is

Improve liquidity and market attractiveness

Companies listed on the GEM market are generally small in scale and high in risk, and the enthusiasm of investors and securities companies for participation will be greatly affected. Especially in the market downturn, investors are more likely to lose confidence. There may be an investment boom in the early days of the establishment of the GEM, but this does not guarantee that the market will not be depressed in the future.

If there are market makers, they bear the funds needed to make the market, and they can cope with any trade at any time and activate the market. Buyers and sellers do not have to wait until the other party appears, as long as the market maker comes forward and assumes the responsibility of the other party, the transaction can proceed. Therefore, the market maker guarantees uninterrupted trading activities in the market, even if the market is at a trough.

Effectively stabilize the market and promote market balance

Market makers have a responsibility to

Market maker's risk management refers to the market maker's internal

The trading system is the core of the financial market, and it is related to the fairness and efficiency of financial market operation. Market makers, as a trading system that originated from the OTC market, first appeared in the US OTC market in the 1960s. With the introduction of the electronic real-time quotation system in the early 1970s, the traditional over-the-counter trading system has evolved into a modern over-the-counter market (OTC) and formed a standardized

According to the operating experience of overseas markets,

Because market makers are the counterparties of all market participants, they will face operating risks themselves. Of course, market makers can also hedge risks. Market makers require their own wealth and good social credibility. International market makers are usually held by larger gold makers or banks. For example, the top five gold makers in the London spot market and the three largest banks in Switzerland are the most typical market makers in the world.

Because market makers have assumed market risks, they naturally have to enjoy some of the benefits. However, it is obviously very thin to judge the rise or fall based on net positions. Here is an example:

Suppose that there are only 4 houses on the planet that can be traded. There are 6 people on the planet. One person A controls the price of the house. There are 300,000 people, and everyone else has 150,000 people. A house is selling for 50,000 at the moment. After the first person bought a set of 50,000, the house price increased to 80,000, and the second person bought a set of 80,000. At this moment, the house price increased by 150,000. If a third person bought a set of 150,000, At this time, the reaction of market maker A is that it will no longer raise prices. Because, first, no one can afford to increase the price again; second, because the demand is basically saturated at this moment, if the price increases repeatedly, it will cause the supply to rise, that is, the first person to sell. So house prices have to fall.

Rule 1: Quotes fall when no expected cash inflows. The data reflecting this phenomenon are total and net positions.

How much will house prices fall? The reasonable market valuation is a set of 93,000, because this equilibrium point is that everyone sells at this price at the same time, market maker A will not make any money. However, the financial market is always overkill. At this moment, if the market maker offers less than 93,000, the market maker will obviously have expected positive returns. This is expected, because the mentality of all three holders is really different at this price point, they cannot leave the market at the same time, so as long as the price remains below the breakeven point, there is a separation market, if someone continues to buy in the same period As long as the average buying price does not fall.

Rule 2: Quotes fall when expected cash inflows are insufficient. The average value of long and short positions allows the price fluctuation range to have a predictable range. The data reflecting this phenomenon is the trend of the average price of long and short positions.

This is very similar to the stock market. Through the form, let customers hand over their chips. Even if someone buys at a low level, it is higher than the average of 50,000 and 80,000. But what makes high-buying customers sell at low prices, or most people sell low and buy high, the first point is time. It is obviously easy to be numb for a long time at a certain price, and the second point specifies a certain exit These orders will trigger changes in total and net positions, so prices will change and follow suit.

Let's continue with the previous example. Suppose there is a third house to buy a house at a certain time in the future. Node X must sell the house, and the first and second people can sell at any time. When the third position is about to close, the probability of the price plummeting greatly increases, and the probability of falling between 80,000 and 50,000 is very high.

Rule 3: Quotes fall when cash outflow is expected at a fixed point in time. The classification of positions according to the closing time is a rule of change in quotes.

Market maker recent market analysis

Based on the above examples we found four major factors:

The total position (ie the entry funds), how to observe the total position. The recent means of observing the total position of the gold and silver markets, with reference to the disclosure of positions in major markets and total positions of ETFs. Calculate the total amount of positions held over time, and analyze the total amount of disclosures in major financial markets.

Net position (long / short ratio) is a relatively difficult data to obtain. Basically, it is possible to study the viewpoints of major banks and long / short viewpoints of major websites for speculative probability.

Long and short average prices, only the background has specific and accurate prices, but the pattern can be roughly estimated, but it must be combined with the position cycle.

Position cycle, calculated through some position disclosure changes to increase and decrease positions, the US market is relatively professional, there will be a simple classification, commercial and non-commercial positions.

Analyzing the recent market situation, we can know the following three facts: Investors' holding positions are too long, and the holding positions must be reduced now; do not pursue most ideas, be sure to participate in extreme value of the price; and multi-marginal returns when the short-term prices are low.

Market maker domestic market quotation

At present, the domestic market maker system lacks pricing power. The so-called market makers, including the Jiangsu Dayuan Intime Precious Metal Exchange, have no real pricing power. Their prices all refer to international trends and have a basic influence on international trends. Can be ignored. However, domestic positions have a certain correlation with international positions. The study of domestic positions to reflect the possible trend of international quotations is also the current mainstream trend.

Market maker quantitative analysis ideas

According to the position change rule after each plunge, combining the four major factors above will get some valuable information. In the future, based on the actual situation you encounter, you can choose the right time to rush the market.