2. Algo Design & Inventory Management

Service Description

In Session 2, we go deep into what separates hobbyist bots from professional-grade trading systems. You’ll learn the core mechanics of how market makers actually design their algos from strategy types to how they adapt in live conditions. We’ll explore the three main families of market making strategy: mean reversion, trend-following, and skewed quoting. But more importantly, we’ll show how each is implemented in context layered, adjusted for flow, and shaped by inventory exposure. You’ll also learn why 80% of market making algos fail: they’re either overfit to historical data, or ignore the one thing that truly matters — risk. This session emphasizes inventory management systems, including delta-neutral tactics, quote throttling, timeouts, and kill switches. It’s where theory meets execution. Finally, we introduce how to backtest these strategies properly not with just price and volume, but using real order book flow, latency assumptions, and adverse selection You’ll learn to read market structure like a pro — spotting where real liquidity sits, how prices are formed, and how spreads react to volatility and volume. We’ll show you the mechanics of both liquid and illiquid markets, and how each demands different quoting and execution strategies. Most traders never take the time to understand who they’re trading against and that’s why they lose. We’ll cover how retail, whales, arbitrageurs, and other market makers interact with markets and why understanding this dynamic is critical to designing profitable strategies. You’ll also explore spot vs. perpetuals, the role of leverage and funding, and how to pick suitable exchanges for different strategies. Lastly, we break down key order types from market and limit to post-only and iceberg so you understand not just how to place an order, but why certain types are used in specific situations. ✅ What You’ll Learn: What makes a market “liquid” or “toxic” Order book depth, slippage, spreads, and price harmonization Spot vs. perps: execution, funding, and open interest How different participants (retail, MMs, arbs, whales) behave Order types and tactics: when and why pros use them 🎓 Session Format: Live 60-minute session Lifetime access to the recording Access to private Discord for discussion 🧠 Instructor Insight: This session is led by market makers who’ve quoted billions across CEXs and DEXs. You’ll see real order books, real trades, and learn what “liquidity” truly means — beyond the charts.