Market Making vs Expected Value Interviews
How expected value interview reasoning changes in market-making rounds where the answer becomes a quote with spread, inventory, and update logic.
Candidates moving from expected value problems into quote-based market-making interviews.
Expected value is the midpoint
In many toy market-making prompts, expected value gives the first fair value estimate. It is a starting point for the midpoint, not the whole answer.
Quotes add a spread
After estimating fair value, choose bid and ask around it. Spread reflects uncertainty, adverse selection, competition, and how much risk you are willing to warehouse.
Concrete example
If a game has fair value near 50 but noisy inputs, quoting 48 at 52 may be more defensible than saying the answer is exactly 50.
Inventory changes the answer
Expected value problems often end at the number. Market-making rounds keep going after a fill, because position and risk change the next quote.
Common mistakes
Candidates often compute EV correctly and then quote too tightly. A correct midpoint can still be a poor market if uncertainty and inventory are ignored.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.