How to Play a Market Making Game?

Financial markets can feel intimidating, but they can also be a lot of fun to explore. At the Amsterdam Investment Club, we host Market Making Games to break down market concepts into interactive sessions. Instead of abstract lectures, we mix estimation games, Dutch auctions, and trading rounds to bring financial concepts to life.

The Order Book

At the heart of market making lies the order book: a table of buy and sell orders with corresponding prices and volumes. Market makers provide liquidity by posting both bids (buy offers) and asks (sell offers). The spread — the difference between buy and sell — represents the market maker’s opportunity for profit. For example, in the order book below, if one wants to buy a stock, they would have to purchase at 3.296, as this is the lowest price someone is willing to sell for. If one wants to sell, this would happen at 3.288, as this is the highest price someone is willing to buy for. Market makers set out these orders to provide liquidity and to make profit without taking market risk, as they try to find the prices for which both sides get filled.

Making Markets Today: The Concept

The game is structured around three simple steps:

• Estimation: Each round begins with an estimation problem. Instead of exact knowledge, players use logic and reasoning to make their best guess.
• Dutch Auction: A bidding process determines the spread at which the market will open (1% → 5% → 10% → 25% → 50% → 100%). So a 1%-wide spread is for example 100<>101, whereas a 100%-wide spread is for example 100<>200
• Trading: Once the market opens, players take on roles as market makers or traders, buying and selling based on their expectations.

Trading vs. Market Making

A market maker posts both a bid and ask. For example, they may set out a market at 70 <> 100 — meaning they are willing to buy at 70 and sell at 100. Traders then interact with this market:

• Trader 1 buys at the ask price
• Trader 2 sells at the bid price

The market maker earns the spread (profit = ask – bid), while traders’ outcomes depend on how close their trades are to the final revealed answer to the estimation problem.

Scoring & Leaderboard

Points are awarded based on accuracy and profitability. Market makers profit from spreads, traders profit or lose depending on the final result. The final answer to the question (final price) is announced either after a certain time or after the market has set at a point where no more trades occur. At the end of the session, participants can check the leaderboard for current rankings.

Adding Complexity

While the core version of the game is simple, it can easily be made more challenging and realistic:

• 🎲 Probability & Randomness: Incorporating dice rolls, card draws, or probabilistic outcomes introduces uncertainty and risk management into the game.
• 📐 More Difficult Problems: Instead of straightforward estimation, questions can involve layered calculations, statistical reasoning, or multi-step logic.
• 📈 Advanced Instruments: Beyond basic bid/ask trading, the game can expand to include options, spreads, or other derivatives — mimicking real financial markets more closely.

This flexibility makes the game suitable for both beginners learning the basics and advanced players who want to test their strategic skills in more complex market environments.

Why Play Market Making Games?

• 📊 Learn how real markets work in a hands-on way.
• 💡 Develop estimation and reasoning skills.
• ⚖️ Understand the roles of traders and market makers.
• 🎯 Compete for points and rankings while having fun.
• 🧠 Practice the skills as they are often played to get into trading firms.

💭 “Markets can be both playful and educational — especially when you combine estimation, auctions, and trading games.”