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Hypothetically, if a market maker had the ability to create lots of little accounts, trade as those accounts, let some go negative, and continue to do this, som
by amluto 4y ago
Hypothetically, if a market maker had the ability to create lots of little accounts, trade as those accounts, let some go negative, and continue to do this, some very positive expected value strategies should be available based on allowing some accounts to go negative, keeping the average profit only slightly negative over time, and walking away from the negative balances.
Making money on average requires actual competence. Creating a large profit variance with a small expected loss is much more straightforward and is normally a losing proposition.
- anonymoushn 4y agoThis plan ends up being a more complicated version of just stealing customer funds though. And they just stole customer funds.
- qeternity 4y agoExactly, this only works if the clearing venue is a third party. In this case, Alameda === FTX