Market maker
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#60 Market maker
Hello,
Let me rephrase my question, in Pennock explanation, he used a cost function to calculate cost of a given number of shares.I have read the market maker explanation on Zocalo Java doc and I couldn't understand how the Zocalo Market maker works and it is related to Pennokc's explanation. Moreover, how does do you handle limit orders ? I am new to such economical concepts and would be happy of you could explain it in simple words,Thanks very much for your time.
The clearest explanation of how the market maker interacts with book orders is in my article "Integrating Book Orders and Market Makers", which is at http://pancrit.org/2007/01/integrating-book-orders-and-market.html.