Does a High Fill Rate Always Guarantee Maximum Profitability for a Market Maker?
No, a high fill rate does not guarantee maximum profitability. A market maker could be consistently offering quotes that are too aggressive, leading to high execution volume but with insufficient edge or premium to cover inventory risk, hedging costs, and operational expenses.
Profitability depends on the spread captured, the volume, and effective risk management, not just the fill rate alone.
Glossar
Fill Rates
Metric ⎊ Fill rates represent the percentage of an order's total volume that is successfully executed at the requested price or better, a crucial performance metric in quantitative trading and market analysis.
Guarantee
Assurance ⎊ Within cryptocurrency derivatives and options trading, assurance represents a formalized commitment regarding the performance or outcome of a contract, extending beyond a mere promise.
Maximum Profitability
Analysis ⎊ Maximum profitability represents the highest possible return achievable from a specific trading strategy or position under ideal market conditions.
High Fill Rate
Execution ⎊ High Fill Rate, within cryptocurrency derivatives and options trading, denotes the proportion of an order fully satisfied at the requested price or better, reflecting efficient market access and liquidity.
Fill Rate
Metric ⎊ Fill rate is a crucial execution metric representing the percentage of an order's total requested volume that is successfully executed at or better than the specified limit price.