Market making games are a cornerstone of quantitative trading interviews at top firms like Jane Street, Citadel Securities, and many more. Unlike traditional interview questions, these games test your ability to think on your feet, manage risk, and make decisions under uncertainty. These skills that are essential for success on a trading desk.
In this comprehensive guide, we'll break down exactly what market making games are, why firms use them, and most importantly, how you can prepare to ace them.
What Are Market Making Games?
Market making games are interactive exercises where you act as a market maker, and/or a market taker.
- Market Maker - Someone who provides liquidity to the market by quoting both a bid price (what you're willing to buy at) and an ask price (what you're willing to sell at).
- Market Taker - Someone who executes an order immediately against the Market Makers' quotes in the order book, thereby removing liquidity from the market.
The interviewer or a computerized counterparty can act like either the market maker or market taker, or both. It depends on the game at hand.
The goal is not necessarily to "win" but to demonstrate:
- Sound judgment in setting prices
- Quick mental math abilities
- Risk awareness and position management
- Adaptability when new information emerges
These games simulate real trading scenarios where you must balance the desire to trade against the risk of being "picked off" by someone with better information.
Why Do Firms Use Market Making Games?
Prop trading firms and market makers don't just want candidates who can solve math problems. They want traders who can perform under pressure with incomplete information. Market making games reveal:
- How you think, not just what you know
- Your risk tolerance and whether it's appropriate
- How quickly you update your views with new information
- Your composure when trades go against you
A candidate who quotes perfectly calibrated prices but freezes under pressure is less valuable than someone who makes reasonable quotes and adapts quickly.
Types of Market Making Games
There are different types of market making games, and there are different ways of how you can play it. In this article we'll cover some of the typical games which you can encounter during interviews or in-house events.
Make Me a Market (Classic Interview Game)
The most common format. The interviewer asks you to "make a market" on something—typically a fact or estimation question.
Example: "Make me a market on the number of golf balls that fit in a school bus."
You might respond: "I'll bid 10,000 and offer 15,000."
The interviewer then either:
- Buys at your ask (15,000) — meaning the interview expects the answer to be higher
- Sells at your bid (10,000) — meaning the interview expects the answer to be lower
- Passes — your market is too wide or correctly priced
After each trade, you update your market based on the information revealed. The credibility of the information also depends on whether the counterparty is supposed to trade reasonable (only aiming to trade in profitable directions) and if the counterparty knows the actual answer (sometimes they don't and they just want to see how you react to certain dynamics).
Generally speaking:
- If the interviewer buys, you need to increase your market (higher bid/ask).
- If the interviewer sells, you need to decrease your market (lower bid/ask).
- If the interviewer doesn't trade, you're either close to the real value, or your market is simply too wide. When there is a lot of uncertainty and no spread restrictions, having a wide market is desired. However, when it's unreasonable wide, it's very unlikely that you'll trade, which doesn't provide you any new information. Therefore, you have to balance your spread as well.
Key skills tested: Estimation, spread sizing, Bayesian updating
Card Trading Games
There are many forms of market making games involving cards. You're dealt cards (often from a standard deck) and must quote prices on some unknown value: typically the sum of all cards in play or the value, but game mechanics can differ.
Example: In Market of Cards, each player holds private cards while center cards are revealed one by one. You quote bid-ask prices on the total game value, and other players can trade against your quotes.
Key skills tested: Probability calculation, expected value, position management
ETF Arbitrage Games
During in-house days or business courses, participants are sometimes invited to play games that simulate markets. For example, you monitor prices of ETFs and their underlying stocks. When prices diverge, you must quickly identify and execute arbitrage opportunities before others (or bots) do.
Example: An ETF holds stocks A, B, and C. If the sum of the stock prices exceeds the ETF price, you can profit by buying the ETF and selling the stocks.
Key skills tested: Mental math speed, pattern recognition, quick decision-making
Fermi Estimation Games
While not strictly "market making", Fermi questions test the same estimation skills. You're asked to estimate quantities with limited information.
Example: "How many commercial airports exist in the world?"
Key skills tested: Decomposition, order-of-magnitude thinking, logical reasoning, deduction capacity from general knowledge
How to Set Your Bid-Ask Spread
One of the most common mistakes candidates make is setting their spread too wide (appearing uncertain) or too narrow (taking excessive risk).
The Basic Framework
- Estimate the expected value — Your best guess for the true answer
- Assess your uncertainty — How confident are you? Which factors are you uncertain of?
- Set your spread — Wider for more uncertainty, narrower for confidence
Spread Sizing Rules of Thumb
| Confidence Level | Suggested Spread |
|---|---|
| Very uncertain (order of magnitude) | 50-100% of midpoint |
| Moderate uncertainty | 20-40% of midpoint |
| Reasonably confident | 10-20% of midpoint |
| High confidence | 5-10% of midpoint |
Example: You estimate 12,000 golf balls fit in a bus, but you're moderately uncertain.
- Midpoint: 12,000
- Spread: ~30% = 3,600
- Your market: Bid 10,200 / Ask 13,800
Note: this is just a rule of thumb. If you follow a top-down approach in your analysis and exactly know which factors you're uncertain of, then a more quantitative approach is possible as well to set your spread.
When to Tighten vs. Widen
Tighten your spread when:
- You receive confirming information
- The counterparty passes repeatedly (you might be close)
Widen your spread when:
- You're consistently getting traded against
- The question involves high uncertainty
- You're approaching position limits
Updating Your Market After Trades
This is where most candidates fail. After a trade, you have new information—use it! Assuming that the counterparty is reasonable in their trades, follow the follow steps.
If someone buys from you (at your ask):
- They believe the true value is higher than your ask
- You should raise both your bid and ask
If someone sells to you (at your bid):
- They believe the true value is lower than your bid
- You should lower both your bid and ask
The size of your update depends on:
- How informed is your counterparty? An interviewer with the answer sheet is very informed; a fellow candidate might be guessing.
- Your current position provides information If you're heavily long, you might want to quote lower to reduce risk.
- Where the last trades in the same direction? Increase the magnitude of by how much you lower or increase your market, depending on the direction.
Position Management
Your position is the net amount you've bought or sold. If you've bought 3 times and sold once, your position is +2 (long 2 units).
Why Position Matters
- Long position (positive): You profit if the true value is high
- Short position (negative): You profit if the true value is low
- Flat position (zero): You're indifferent to the outcome
Position Management Considerations
- Quote to reduce risk — If heavily long, quote slightly lower to invite sellers
- Know your limits — Some games have position limits; don't ignore them
- Consider variance — A large position means large potential swings in P&L
- Manage uncertainty - If the direction of the market is highly unsure, or the volatility is (too) high, consider flattening your position if you can't cover the risk.
Calculating Your P&L
At the end of the game, your P&L depends on:
- Your position × (True value - Average price paid)
Example:
- You bought 2 units at 100 and 1 unit at 110
- True value revealed: 120
- P&L = (120 - 100) + (120 - 100) + (120 - 110) = 20 + 20 + 10 = +50
Common Mistakes to Avoid
Not Updating After Trades
The biggest red flag. If you're traded against and don't move your market, you're ignoring valuable information.
Spreads That Are Too Wide
A bid of 1,000 and ask of 100,000 shows you have no idea, and you're not even trying. Start with a reasonable estimate and adjust.
Spreads That Are Too Narrow
Quoting 9,999 bid / 10,001 ask suggests overconfidence, or you don't know how to mitigate risk. You'll get picked off repeatedly.
Ignoring Position Risk
Going massively long or short without awareness is dangerous. Always know your position.
Analysis Paralysis
Taking 60 seconds to quote shows poor time management. In real trading, opportunities disappear in milliseconds. You should be able to react under uncertainty.
Preparation Strategies for (Quant) Trading Interviews
Play Market Making Games Online
The best way to improve is through practice. Market Making Games offers several games designed specifically for interview prep:
- Make Me a Market — Classic interview format with estimation questions
- Market of Cards — Card-based probability trading
- ETF Trading — Fast-paced arbitrage identification
- Fermi Questions — Order-of-magnitude estimation
- Fruit Market — Beginner-friendly introduction (free!)
Practice Mental Math
Speed matters. Practice:
- Adding 3-4 two-digit numbers quickly
- Percentage calculations (10%, 15%, 20% of various numbers)
- Basic probability (dice, cards, coins)
The Trading Interview Math Trainer app can help build these skills.
Study Probability Fundamentals
Many market making games involve:
- Expected value calculations
- Conditional probability
- And more
For structured practice with probability questions, brainteasers, and more, check out Trading Interview.
Mock Interviews
Practice with friends or use interview prep services. The pressure of a live setting is different from solo practice. Many people overestimate the technical topics and underestimate the behavioral part. Trading Interview also offers a mock interview service.
What Interviewers Are Really Looking For
Beyond technical skills, interviewers assess:
- Intellectual Curiosity - Do you ask clarifying questions? Do you think about edge cases?
- Communication - Can you explain your reasoning clearly? Do you verbalize your thought process?
- Composure - How do you react when trades go against you? How do you communicate under uncertainty and pressure? Do you panic or adapt?
- Coachability - When given feedback or hints, do you incorporate them?
- Risk Awareness - Do you understand when you're taking on risk? Can you quantify it?
Conclusion
Market making games are challenging because they test multiple skills simultaneously: estimation, probability, mental math, risk management, and decision-making under pressure. The good news is that these skills are learnable with practice.
Start by understanding the fundamentals covered in this guide, then put them into practice with market making games. The more you play, the more intuitive these concepts become.
Remember: interviewers aren't looking for perfection. They're looking for sound reasoning, appropriate risk-taking, and the ability to adapt. Demonstrate these qualities, and you'll be well on your way to acing your quant trading interview.
Ready to practice? Start playing market making games →
Need to practice other interview question aspects? Check out Trading Interview for courses, interview level questions and industry insights.