How Market Making Bots Improve Liquidity and Market Stability
Market making bots are critical in ensuring that markets remain liquid as well as stable throughout the market systems. Knowledge of their role can I think can help business professionals gain insights into the same. These bots are further discussed in this article as to how they improve market conditions. The Role of Market Making Bots What Market Making Bots Do Market making bots include programs that provide continuous markets for any underwritten security, thereby providing market liquidity. They assist in maintaining the stability of the market by being present and active most of the time. Improving Market Liquidity Maintaining Order Consistency Auto trading robots act as market makers and therefore always place both bid and ask orders to make the size of the gap as small as possible. This is a sign of high liquidity, since trading is cheaper and easier for investors, given the narrow bid-ask spread. Increasing Trade Volumes These bots trade frequently and thus increase th