What the Market Making Game Tests
The market making game puts you in the role of a liquidity provider: you continuously quote a bid (the price you'll buy at) and an ask (the price you'll sell at), and a stream of traders hits your quotes. Your goal is to end each round with positive P&L.
This is exactly the skill firms like Optiver, Jane Street, and IMC probe in their interviews. They want to see whether you can price uncertainty quickly, manage a running inventory position, and avoid getting picked off by informed traders — all at the same time. The game compresses those dynamics into a format you can practice in minutes.
If you haven't tried it yet, play the market making game here.
How the Game Mechanics Work
Each round, a hidden "true value" for an asset is drawn from a distribution (often uniform over a range like 1–100). You don't know the true value. You set a bid and an ask. Traders then arrive and either:
- Hit your bid — they sell to you at your bid price. This is likely because the true value is below your bid.
- Lift your ask — they buy from you at your ask price. This is likely because the true value is above your ask.
At the end of the round, your inventory is marked to the true value and your P&L is calculated. The spread you earn on each trade is your gross profit; adverse inventory moves are your losses.
For a deeper dive into the theory behind these mechanics, see Market Making Explained.
How to Maximize Your Score
Core Principle: Balance Spread Width vs Trade Frequency
A wider spread earns more per trade but reduces how often you trade. A narrower spread increases trade frequency but leaves less margin to absorb bad fills. Finding the right width is the central skill.
Your spread should be at least as wide as your uncertainty about the true value. If the true value is drawn uniformly from a range of 20, a spread narrower than a few units means you're regularly taking positions where the expected move against you exceeds what you earn from the spread.
For a fair die, the expected value is 3.5. Start your market centered here: bid 2.75, ask 4.25 gives a spread of 1.5.
A tighter spread earns more per trade but exposes you to more adverse selection. Find the spread that maximizes P&L over 10 rounds.
If you are unsure about the distribution, widen your spread. A spread that loses you 0.5 on bad trades but earns 1.5 on good ones is net positive.
Understanding Adverse Selection in the Game
Adverse selection is the single biggest P&L killer for new players. When an informed trader buys from you, the true value is almost certainly above your ask — you've just sold something worth more than you received. Conversely, when an informed trader sells to you, the true value is below your bid.
The game typically exposes you to a mix of informed and uninformed traders. Uninformed traders are noise: they buy and sell randomly, generating spread income for you. Informed traders are the threat.
The key insight: the fact that someone is willing to trade with you is itself information. A rational counterparty only buys at your ask if they believe the asset is worth more. Treat each trade that hits your market as mild evidence that your midpoint is wrong, and update accordingly.
Concretely: if you get hit on your ask twice in a row, consider raising both your bid and ask slightly. The market is telling you something.
P&L Optimization Strategy
Beyond getting the theory right, here are the habits that separate high scorers from average ones:
Stay near flat. Inventory is exposure. Every unit you hold long or short is a position that can move against you. Actively manage back toward zero by adjusting your quotes asymmetrically — don't wait for the game to end with a large open position.
Don't chase losses with wider spreads. After a bad fill it's tempting to widen your spread aggressively to recover. This often backfires: you trade less frequently and continue to sit on a losing inventory position. The better fix is to adjust your mid, not blow out your spread.
Track your running P&L per trade. If your average realized spread is shrinking, informed flow is increasing. React by widening. If you're consistently getting filled on only one side, your mid is drifting away from fair value — recenter it.
Use the full distribution. Many players set the same spread every round regardless of how wide the true value range is. The game rewards you for calibrating your uncertainty honestly: wider range, wider spread; tighter range, tighter spread.
Firms That Test Market Making
The Optiver interview almost always includes a market making round. Interviewers will ask you to quote markets on unusual quantities and probe your reasoning on spread width.
Jane Street trading interviews include interactive games and market making simulations. They test whether you can reason about expected value in real time.
IMC focuses heavily on market making fundamentals. Expect questions about bid-ask spreads, adverse selection, and inventory management in both OA and on-site rounds.
As a major market maker in equities and options, Citadel Securities tests market making intuition at every level of the interview process.
How This Maps to Real Interviews
The live interview version of this game usually sounds like: "I'll give you a 6-sided die. Make a market in the number of heads in 10 fair coin flips." You have 10–30 seconds to quote a bid and ask. The interviewer then acts as a trader — buying or selling depending on your prices.
Quick Facts
Practicing the game builds the fast, systematic thinking these interviews demand. The mechanics are simpler than the live version, but the muscle memory is the same.
Start Practicing
The game takes about five minutes per session and directly trains the intuitions tested at every major quant firm. Run through several rounds, review your P&L breakdown after each session, and focus specifically on the rounds where you lost money — those will almost always trace back to either a miscalibrated mid or an unmanaged inventory position.
Play the market making game now and track your spread efficiency over time. Once you're comfortable with the basics, work through the market making theory post to sharpen the math behind what the game is teaching you.