Quant Interview Market Making Mistakes
Common market making interview mistakes in fair value, spread width, quote updates, inventory, overtrading, and review.
Quant trading candidates practicing market making and trading game interviews.
Quoting too tightly
Tight markets look confident but can be costly when uncertainty is high. Spread width should reflect uncertainty, adverse selection, and inventory risk. A wide quote with a reason is often stronger.
Stale fair value
If trades or clues arrive and your fair value never moves, you may not be using information. Practice updating the midpoint, width, and skew based on what the game reveals.
Ignoring inventory
Inventory changes risk. If you become one-sided, your next quote may need to skew away from adding more of the same exposure. Explain that adjustment when you make it.
Concrete example
If buyers keep lifting your offer, ask whether your offer is cheap, your fair value is low, or the buyers have better information. Moving only because "people bought" is weaker than naming the reason.
Overtrading
Activity is not edge. If you cannot explain price, size, and update rule, trading more may just add noise. Review decision quality, not only final P&L.
Common mistakes
Candidates often treat market making like arithmetic. It is a decision loop: estimate, quote, observe, update, manage risk, and explain.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.