CHAPTER 6
How Do Traders Make a Market?
This chapter will explore how traders make markets. Putting a price where a trader is prepared to buy or sell something is not a simple decision. It is a complicated process of filtering through the barrage of financial data that is constantly coming to the trader, assessing the liquidity and volatility of the market prices and understanding the risk and return targets that the trading book has. The trader’s job is to keep focused on what is happening not only in his specific market but also in other financial markets that may affect his market. This is why traders rarely speak to clients. They don’t have time. They need to focus on their markets. This chapter will take the three trades from Chapter ...
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