Overview
The Quad Market Maker bot is an automated market making strategy that places multiple buy and sell orders at different price levels around the current market price. It monitors orders and replenishes them after a configurable delay when orders are filled, helping you earn profits from the spread between buy and sell prices while providing valuable liquidity to the market.
The bot places an equal number of buy and sell orders at incrementally spaced price levels and amounts. When orders are filled, it waits for a configurable delay period before canceling remaining orders and placing a fresh set. This replenishment mechanism helps manage inventory and adapt to changing market conditions. A new optional stop-loss feature provides risk management by monitoring overall portfolio value.
Details
Market making is the process of simultaneously providing buy and sell liquidity to a market by placing limit orders on both sides of the order book. Market makers earn profit from the spread - the difference between their buy and sell prices. For example, if you place buy orders at $9.90 and sell orders at $10.10 for an asset trading at $10.00, you can potentially earn $0.20 per unit when both orders get filled.
The Quad Market Maker enhances this basic strategy by:
Placing multiple orders at incrementally spaced price levels
Automatically adjusting order sizes based on price distance from mid-market
Optional inventory skewing to help maintain balanced positions
Smart order replenishment: After orders are filled, waits for a configurable delay before refreshing all orders
Optional Stop Loss: Provides a safety net based on the overall portfolio value
How to Configure the Market Maker Bot
General Settings
Exchange Platform: Select the exchange where the bot will operate.
Trading Account: Choose the account for bot operations.
Market: Select the trading pair (e.g. BTC/USDT).
Strategy Settings
Number of Orders: Total number of concurrent orders to maintain. For example, selecting 4 will place 2 buy and 2 sell orders. Available options range from 2 to 200 orders.
Order Start Amount: The base amount for the innermost buy/sell orders closest to the current market price. This sets your initial position size.
Order Step Size: The amount to increment each subsequent order by. This allows you to place larger orders at more advantageous prices.
Distance Between Buy Orders: Sets the price spacing between buy orders as a percentage. For example, 0.1% means each buy order will be placed 0.1% lower than the previous one.
Distance Between Sell Orders: Sets the price spacing between sell orders as a percentage. For example, 0.1% means each sell order will be placed 0.1% higher than the previous one.
Order Replenish Delay: Time (in minutes) to wait after the first order fill before canceling remaining orders and placing a fresh set. During this delay period, other orders may continue to fill. This delay helps reduce excessive order updates while allowing the market maker to adapt to changing conditions.
Advanced Settings
Inventory Skew: Enable/disable position size adjustments based on your current inventory.
Target Base Percent: When inventory skew is enabled, this sets your desired ratio of base currency to quote currency (e.g. 0.5 = 50% in each).
Stop Loss Percent: Optional. Set a percentage (e.g., 0.05 for 5%) loss based on the initial total portfolio value (calculated at bot start). If the current portfolio value drops below this threshold, the bot will attempt to cancel all open orders and then stop. Set to 0 (default) to disable.
Frequently Asked Questions
How does Inventory Skew work?
When enabled, the bot will adjust order sizes based on your current inventory levels compared to the target ratio. If you hold more of the base asset than targeted, it will increase sell order sizes and decrease buy order sizes to help rebalance your position, and vice versa.
How does the Stop Loss work?
If enabled (by setting Stop Loss Percent > 0), the bot calculates your portfolio's total value (using the capitalBase determined at startup) as the initial baseline. If during operation, the current total portfolio value (calculated using current balances and market price) drops below the calculated threshold (Initial Value * (1 - Stop Loss Percent)), the bot will attempt to cancel all open orders and then stop trading.
How much capital do I need?
The bot requires sufficient capital to place the configured buy and sell orders. The system calculates an estimated starting capitalBase based on your parameters, which represents the total value needed (in quote currency equivalent) to place the initial set of orders. Ensure your account holds adequate balances of both the base and quote currency to cover potential fills.
What happens when orders get filled?
Starts the replenishment delay timer (if it's the first fill)
Continues monitoring other active orders, which may also fill during the delay period
Once the delay period elapses, cancels any remaining orders and places a fresh set based on current market conditions and parameters
How does the order replenishment work?
When an order gets filled, the bot starts a timer for the configured Order Replenish Delay. During this delay period, other orders remain active and may continue to get filled. Once the delay period elapses, the bot cancels any remaining orders and places a fresh set of orders based on current market conditions. This mechanism helps reduce excessive order updates while maintaining an effective market making presence.
Can I use other bots alongside the Market Maker?
Yes, but be mindful that other bots trading the same pair may interfere with the market maker's orders or affect your overall balance, potentially triggering the stop loss unexpectedly if enabled. It's generally recommended to use the market maker in isolation for a given trading pair or carefully consider the interactions.
What markets can I use this on?
You can use this bot on any market supported by your chosen exchange that has sufficient liquidity. However, it's recommended to:
Choose markets with reasonable trading volume and tight spreads.
Set appropriate order spacing based on the market's typical volatility.
Ensure your order sizes are appropriate for the market's depth (not too large or too small according to exchange limits).
Remember that market making involves actively managing inventory risk and requires sufficient capital on both sides of the market. Always start with small sizes while learning how the strategy performs in your chosen market.