What causes the ASK and BID price to change? | Traders Hideout


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What causes the ASK and BID price to change?

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artemiso View Post
It's unlikely for them to score nothing or score 200 points, so I can safely quote 1 point against 200 points. I'd make a killing if people sell me tickets at 1 point because those bets will be worth $900 if they end the game at 90 points. I'd also profit if people buy tickets from me at 200 points because my counterparties will have to pay me $1100.

This is also why people describe market making as similar to running a casino. You have a built-in edge into the game so that whether people buy or sell from you, you make money.

But it's not that easy, because there's a lot of other casinos that people can go to to place the same bet, and the exchange facilitates electronic quoting of every market maker's best bid and offer, which makes the pricing extremely competitive.

It's easy for me to make money if I'm the only market maker on the Jazz game quoting 1 point against 200 points, but if there's another market maker quoting 90 points against 110 points, he takes away all of my business.

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