medium · Volume Spread Analysis background-trend-context
A market-maker is bearish and expects lower prices. According to the mechanics of price discovery, how will they likely react when a retail buy order enters during a temporary rally?
- They will deliberately withhold their quote for a moment to force a sudden visible gap-up in price
- They will offer a 'good' price to the buyer, effectively capping the upside and narrowing the spread.
- They will widen the bid-ask spread noticeably in order to increase their own profit margin on the trade
- They will mark the price up sharply and aggressively on thin volume to discourage the buyer from entering at all
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