Algorithmic systems
What is an Automated Market Maker (AMM) algorithm in futures and how does it capture the fractional institutional bid-ask spread?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
An automated market-making algorithm continuously posts both bid and ask quotes to capture the spread, dynamically adjusting prices and size based on inventory and volatility conditions.
How it works
These systems earn small repeated spread captures across many trades while managing inventory risk, but can suffer significant losses during sudden volatility spikes if hedging fails fast enough.
An example
An algo quotes both sides of MES continuously.
Risk & limitations
Market-making carries real inventory and gap risk, not riskless profit.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.