Blog Posts

In financial trading, the terms “ask” and “bid” refer to the two sides of a trade for assets such as stocks, bonds, commodities, and foreign exchange. They represent the prices at which buyers and sellers are willing to transact. For example, if you look at the price of a security within your broker, it will […]

The Dip and Rip pattern is a common trading strategy used by traders to identify potential buy opportunities in the stock market. It’s especially popular among day traders and those involved in momentum trading. This pattern is characterized by a significant price dip shortly after the market opens, followed by a strong reversal and upward […]

Consolidation in stocks refers to a period where a stock’s price moves within a relatively stable range without a clear trend for an extended time. This phase is characterized by a balance in supply and demand, indicating that investors are in agreement on the stock’s price, leading to sideways movement in the price chart.   […]

Reinsurance is prized in portfolio construction because of the diversification it can provide in a portfolio. While most asset classes move at least partially due to global credit cycles, reinsurance instruments often trade due to a totally separate set of factors (e.g., natural disasters and other weather-/insurance-related events). For example, catastrophe bonds (CAT bonds) payout […]

It’s technically possible for small traders to become market makers. Market making is not limited by the size of the entity but by its ability to comply with the rules and provide continuous liquidity to the market. Nonetheless, there are significant challenges and it requires adherence to specific regulatory, financial, and technological requirements   Key […]

Options strategies are often used for synthetic leverage. They help us get exposure to the underlying asset without having to transact in the underlying market. Traders use options to, for example: have a customized and/or defined-risk trade structure help them leverage their positions – i.e., get exposure to a higher amount of notional than would […]

Can a market maker own an exchange, broker, or data provider? There are definite advantages for a market maker to own an exchange, data provider, or broker. But there are important considerations and potential conflicts of interest to understand.   Advantages of Market Maker Integration with Exchanges, Brokers & Data Providers Information A market maker […]

We look at how market makers choose their markets and strategies.   Key Takeaways – How Market Makers Choose Their Markets & Strategies Liquidity and Volume Market makers select markets with high liquidity and volume to ensure enough trading activity for tight bid-ask spreads and minimal holding times for securities. Risk Management They use sophisticated […]

Market makers have an important role in financial markets by providing liquidity and facilitating trading by buying and selling securities from their own inventory. They stand ready to buy or sell at publicly quoted prices, which helps with smoother market operations. The largest market makers typically operate in various segments, including equities, fixed income, foreign […]

Based on historical data for the S&P 500 index going back to 1928: In up years (when the index has a positive annual return): The average annual percentage gain is around +20%. Up years occur around 72% of the time. In down years (when the index has a negative annual return): The average annual percentage […]