Market Making Calibration Drills
Market making calibration drills for improving probability estimates, fair-value confidence, spread width, and post-practice review.
Candidates whose quotes are consistently overconfident or underconfident.
Calibration links confidence to accuracy
Market-making calibration means your confidence, spread width, and quote size match how accurate your fair-value estimates actually are.
Log probability estimates
For binary markets, record your probability estimate before the outcome. Review whether 70 percent estimates come true roughly 70 percent of the time over many drills.
Concrete example
If your 80 percent estimates are right only half the time in practice, your quotes are likely too tight or too large for your true uncertainty.
Review fair-value errors
Track whether your midpoint was high, low, or reasonable. This helps separate value errors from spread or inventory errors.
Adjust spread from evidence
If your estimates are noisy, widen quotes until practice results justify tighter markets.
Common mistakes
Candidates often practice games without recording confidence. Without a log, calibration does not improve reliably.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.