Market maker (MM)

The Market Maker (MM) algo provides liquidity in a designated market by sending orders on both sides of the market, using the midpoint of the current market as the reference price, and fade to maintain a neutral position.

Market Maker (MM) algo in the AVAX/USDT market on Binance. Will send size 0.25 AVAX orders 0.1% away on each side, and will cancel/replace if market moves by 0.025%. As MM algo picks up positions, fade quotes by 0.05 USDT per 1 AVAX position accumulated, and will not send orders to exceed a total position of 10 AVAX.

Parameter	Description
Market	Symbol & price currency of the market, as well as the exchange
Buy/Sell Quantity	Size of each order to send
Minimum/Maximum Position	Position bounds that the algo will not exceed. Will only send one sided orders the cumulative position reaches the minimum or maximum.
Max Improve BBO	Most an order can be more aggressive than the current best bid or offer. Can prevent order from being too tight inside current spread.
Position Tilt	The amount order prices should shift as a position is accumulated. For example, if MM algo net buys tokens, this will lower the price of bids & offers to fade the market. Measured in price change per unit.
Reference Distance Fraction	Distance away from reference price to send orders. For example if Reference Distance Fraction is 0.01, the bid and offer order sent will be 1% around the current reference price (and thus 2% wide).
Tolerance Fraction	Amount a new order would differ from current order to cancel and replace. Used to prevent flickering quotes and unnecessary cancel and replace, as well as maintaining queue priority. Measured as a fraction, i.e. not in price terms.
Order Lockout	Minimum amount of time to wait between orders
Fill Lockout	Amount of time to wait after a trade to send a new order
Reject Lockout	If an order is rejected, wait this amount of time before trying again