I have the book "All About High Frequency Trading" and within it it describes a HF set up. The imaginary firm provide quotes as a market maker, but the book also suggests the same firm also use proprietary algo trading. This seems a bit strange to me if they are trading on the same stocks they are market making. Could someone explain under which circumstances a market making firm would also perform prop trading? Would it be same/completely different stocks? Same stocks different markets? Different asset classes?I ask because a market maker prop trading in their own market seems a little like trying to play against yourself at pool (difficult)- unless one could consider the fact there are other market makers and then it wouldn't be the case?
Last edited by JT77
on April 25th, 2013, 10:00 pm, edited 1 time in total.