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Understanding Market Making and Liquidity Provision Strategies
A rigorous, India-grounded path into how market makers actually operate: the economics of the bid-ask spread, inventory risk, adverse selection, order book microstructure, and the regulatory framework SEBI and NSE/BSE impose on liquidity providers. Built for quant researcher aspirants, prop trading applicants, and traders scaling a systematic book, using real Nifty, Bank Nifty, and NSE order book examples throughout.
MODULES
9
DURATION
~6.3 hrs
TRACK
Quantitative Finance
Access Level
LEARNER
Everything included
Full Text Playbooks
Actionable Exercises
Mobile Reading Mode
Lifetime Updates
Curriculum Breakdown
Chapter 1: Foundations of Market Making and Liquidity
4 Lessons▶
What Is Market Making? The Business of Buying and Selling Simultaneously9 min read
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The Order Book Explained: Bids, Asks, Depth, and the Best Price10 min read
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Liquidity Takers vs Liquidity Providers: Who Pays the Spread and Why9 min read
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SEBI's Designated Market Maker Scheme: How India Keeps Illiquid Options Tradeable11 min read
Chapter 2: The Bid-Ask Spread: What It Is Made Of
4 Lessons▶
Decomposing the Spread: Order Processing, Inventory, and Adverse Selection Costs10 min read
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The Roll Model: Estimating Effective Spreads from Price Reversals11 min read
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Why Nifty Options Trade Tighter Than a Small-Cap Stock's Spread9 min read
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Tick Size and Spread: How NSE's Tick Rules Shape Market Maker Behaviour10 min read
Chapter 3: Inventory Risk and Quote Skewing
4 Lessons▶
Inventory Risk: Why Market Makers Fear One-Sided Order Flow9 min read
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The Avellaneda-Stoikov Intuition: Quoting Around a Reservation Price12 min read
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Skewing Quotes to Offload Inventory Without Moving the Market10 min read
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Case Study: A Market Maker's Inventory Through a Volatile Bank Nifty Expiry Day12 min read
Chapter 4: Adverse Selection and Informed Order Flow
4 Lessons▶
Adverse Selection: When the Trader on the Other Side Knows More Than You9 min read
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The PIN Model: Estimating the Probability of Informed Trading11 min read
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Order Flow Toxicity and VPIN: Spotting Trouble Before the Spread Blows Out11 min read
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How Market Makers Widen Spreads Ahead of RBI Policy Days and Results Season10 min read
Chapter 5: Market Microstructure and Execution Mechanics
4 Lessons▶
Order Types Market Makers Use: Limit, Iceberg, and Immediate-or-Cancel on NSE10 min read
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Colocation, Latency, and the Race to the Top of the Book10 min read
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SEBI's Algorithmic Trading Framework: Obligations for Market Makers in India11 min read
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Circuit Filters, Price Bands, and How They Constrain Market Maker Quotes9 min read
Chapter 6: Evaluating a Market Making Business
4 LessonsChapter 7: Market Making Across Asset Classes
4 Lessons▶
Market Making in Currency Derivatives: USDINR Futures on NSE10 min read
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Market Making in Commodity Derivatives: MCX Gold and Crude Oil10 min read
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How the Three-Cost Framework Changes Across Asset Classes11 min read
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Cross-Asset Case Study: Comparing a Bank Nifty Option Desk to a Commodity Futures Desk12 min read
Chapter 8: Careers and the Business of Market Making in India
4 Lessons▶
Who Actually Runs Market Making Books in India: Prop Firms, Bank Desks, and LES Market Makers10 min read
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What a Market Making Desk Actually Hires For: Roles and Skills10 min read
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Breaking In: How Quant Researchers and Prop Trading Applicants Actually Get Hired11 min read
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A Realistic First 90 Days on a Market Making Desk10 min read