A Job in Market Making – a Brief Guide
1. The opportunity of a lifetime
If you are interested in working for a market-making or high-frequency trading firm, there are a few things you should know. First, these firms are very selective about who they hire. They are looking for the best and the brightest, so you will need to show something more than excellent grades and a strong background in math and computer science.
Second, these firms are extremely competitive, fast-paced, and demanding. You will need to be able to think quickly and make decisions under pressure.
Third, these firms require a large amount of capital to operate, so you will need to be comfortable with risk.
Fourth, market making firms often use complex algorithms and trading strategies, so you will need to be able to understand and use complex mathematical models.
Check here for details on how we do market making for crypto projects
2. What are the specifics of market making firms?
A market maker firm is a firm that
- buys and sells assets on a regular basis,
- provides liquidity to the market,
- quotes bid and ask prices,
- and earns a profit from the spread between the bid and ask prices.
Additionally, market makers like any other high-frequency trading firms:
- use powerful computers to trade assets at very high speeds,
- make a large number of trades each day,
- their profit from one transaction is tiny
- that can add up to a large sum over the course of a day.
3. Why join a market maker firm?
There are many reasons you could want to work for a market-making and high-frequency trading firm. A few of them are:
- You will work for a firm that is on the cutting edge of technology. These firms often use the latest and greatest in trading technology (very often built in-house), which can be very exciting for those who are interested in that sort of thing.
- You will work for a firm that is highly profitable. These firms often make a lot of money, which can be very rewarding for those who are looking to make a lot of money.
- You will be a part of a team that is highly successful. These firms often have a very high success rate, which can be very motivating for those who are looking to be a part of a winning team.
- You will work for a firm that is highly respected. These firms often have a very good reputation due to their highest standards of operations, mature processes, and scale.
- You will work for a firm that offers a lot of opportunities for growth. These firms often offer a lot of opportunities for advancement, which can be very appealing for those who are looking to move up in their career
If you are interested in the topic of liquidity provision, you should see our list of books on market making and related topics.
4. Is it for everybody?
However, let’s be frank – this is not a work for everyone. The fast-paced and competitive environment is challenging for many people in the long run. There are a few personal traits you should have to function well in organizations that use algorithms for trading on financial markets. These personal traits include:
- You should be very good with computers. As mentioned earlier, these firms often use the latest and greatest in trading technology, so you will need to be very comfortable with computers.
- You should be very good at math. These firms often use complex algorithms to trade, so you will need to be very comfortable with math.
- You should be very detail-oriented. These firms often trade on microscopic margins, which means you will need to be able to pay attention to tiny details.
- You should be very disciplined. These firms often have very strict rules and guidelines, which means you will need to be very disciplined in order to be successful.
- You should be very competitive. These firms often have a lot of competition, which means you will need to be very competitive in order to be successful.
If you have these personal traits, then working for a market-making or a high-frequency trading firm could be a great career choice for you.
5. Possible roles
There are many roles to cover in high-frequency trading firms. These include:
- Sales and trading
- Algorithmic trading
- Market making
- HFT technology
- Quantitative analysis
- Portfolio management
- Risk management
As any other company, the market maker also has back-office teams, so if you are not in trading, but would like to take part in building this kind of company and support its daily operations, there will be roles to cover:
- Human resources
6. Crypto – a new frontier
Right now, as digital assets are at the forefront of innovation in financial markets, there are a few companies that are scaling their operations there. This may be very interesting for people that like taking on new challenges and building things. Especially in contradiction to traditional markets, where the cards are already mostly dealt with and the industry is after the consolidation phase.
We have a separate piece on getting a job in crypto, defi and web3
Check here for details on how we build organic liquidity for crypto projects