Market Making Strategy
Provides liquidity on both sides of the order book, profiting from the bid-ask spread while maintaining minimal directional exposure.
What it is
Market making is the practice of continuously quoting buy and sell prices on both sides of a market's order book. The market maker profits from the difference between the price they buy at (bid) and the price they sell at (ask). They don't take a view on the outcome — they earn the spread by facilitating trades for other participants who want immediate execution.
How it works
A market maker places limit orders on both sides of the book simultaneously. If Yes is trading around $0.50, they might bid $0.49 and offer $0.51. When both orders fill, they've earned $0.02 per share without taking any directional risk. The key is maintaining tight spreads and managing inventory — if too many trades fill on one side, the maker adjusts quotes to rebalance.
Successful market makers operate at high frequency with automated systems that continuously update quotes based on order flow, volatility, and inventory levels. They need deep capital to absorb temporary imbalances and sophisticated risk management to avoid getting caught on the wrong side of sudden price moves.
Bid-Ask Spread Visualizer
Adjust mid-price and spread width. The green zone is profit captured per round trip.
How it works in practice
On prediction market order books, market makers are the primary source of liquidity. They maintain resting orders at multiple price levels, tightening spreads in liquid markets and widening them in volatile or illiquid ones. Their presence is what allows other traders to enter and exit positions without excessive slippage.
The most active market makers operate across hundreds of markets simultaneously on platforms like Polymarket, Kalshi, and Probable Markets, using algorithms to price risk and manage exposure in real time. They're identifiable by their high maker-order percentage (typically above 60%), short holding periods, and presence on both sides of nearly every market they touch.
Revenue at Scale
Spreading across more markets increases total spread income. Assumes ~3 fills per market per day.
Key Characteristics
The behavioral fingerprints that identify a market maker in on-chain data.
Risks to Consider
Top Market Maker Traders
Ranked by risk-adjusted performance score.
Other Strategies
Buys both sides of a market when the combined cost is less than $1.00, locking in a risk-free profit on every pair.
Takes liquidity with rapid-fire market orders across many markets, capturing small price movements with very short holding periods.
Systematic, high-frequency execution with a hybrid maker/taker approach. Sits between scalpers and market makers in speed and liquidity provision.
Builds both-side positions over time, merging pairs when the cost is favorable. Patient capital deployment in volatile markets.
Holds positions for days to weeks, riding medium-term sentiment shifts and market cycles for larger per-trade profits.
Goes deep in one domain — sports, politics, or crypto — putting 85%+ of volume into a single market category where specialized knowledge creates an edge.
Follows price trends with statistically validated edge, scaling positions based on signal strength and maintaining consistent alpha generation.
Takes one-sided conviction bets across diverse market types. The generalist approach — trading whatever looks mispriced, wherever it appears.
Takes positions based on conviction without a demonstrated systematic edge. High activity, but returns are driven by market direction rather than repeatable strategy.