Market-Making Simulator

Build expected-value games and a quoting engine that manages inventory, adverse selection, and P&L.

4 parts14 individual lessons1.2 estimated hours70 XP available

0%0 of 14 complete

No compressed chapters.

Every source step is its own lesson with intuition, concepts, correctly rendered MathJax mathematics, implementation, tests, mistakes, and a checkpoint.

PART 1

Expected Value & Betting Games

Warm up with expected-value computations and optimal stopping rules on dice and card-draw games that mirror the decision logic used later in quoting.

0/4

001expected value+5 XP 002one reroll die value+5 XP 003pay per reroll die game+5 XP 004red black card game value+5 XP

PART 2

Core Market-Making Mechanics

Implement the basic quoting loop: turn a fair value into a bid/ask, execute counterparty trades, and mark cash and inventory to market for P&L.

0/3

005make quotes+5 XP 006execute trade+5 XP 007mark to market pnl+5 XP

PART 3

Risk-Aware Quoting & Belief Updates

Extend the quoter to account for adverse selection, uncertainty, and inventory skew, and update fair-value estimates from observed trades and revealed cards.

0/5

008adverse selection loss+5 XP 009uncertainty spread+5 XP 010inventory skewed quotes+5 XP 011update fair value from trade+5 XP 012update remaining card value+5 XP

PART 4

Episode Simulation & Evaluation

Tie everything together by running full market-making episodes and aggregating P&L statistics across many simulated runs.

0/2

013run market making episode+5 XP 014summarize episode pnls+5 XP