4 ms·
If the trend is upwards but there are still sells, then that's pretty normal for a market maker -- they continue executing their standard risk controls and don'
by patio11 11y ago
If the trend is upwards but there are still sells, then that's pretty normal for a market maker -- they continue executing their standard risk controls and don't really care.
If buys greatly outnumber sells and the price is surging, that is problematic for the market maker, because that implies they're going to accumulate a short position and start losing money on it. You should expect them to start resizing/repricing their asks (i.e. offer to sell less at close-to-market prices), possibly terminating their short via buying (in extremis), and (if available) hedging their position via instruments other than the one which is surging.
A very rapid spike up is indistinguishable for market makers from a very rapid crash down: expect them to pull liquidity and wait for the market to stabilize before reintroducing it. Their mental monologue is "Sorry, but you guys don't pay me for this."