Market Maker Bot

Overview

The Market Maker Bot (also known as Volume Bot) allows you to run an automated market-making strategy in just a few clicks. The bot simultaneously places buy and sell orders around the current market price. This feature helps traders earn spreads while providing market liquidity through a TWAP (Time-Weighted Average Price) strategy with passive only and active limit execution.

Key Features

Automated Market Making

• Simultaneously places buy and sell limit orders around current market price

• Uses TWAP strategy for optimal execution timing

• Automatically manages limit order placements and execution

• Splits the notional amount equally between buy and sell orders

Execution Strategy

• TWAP Execution: Orders are executed over time using the TWAP algorithm to minimize market impact. Your notional amount is split equally between the buy and sell sides

• Passive Orders: The bot exclusively uses limit orders (maker orders) to capture spreads and avoid paying taker fees. This may result in slower execution if market conditions don't align with your order placements

• Dynamic Pricing: Orders are placed around the current market price with appropriate spreads to stay competitive

Duration Calculations

Calculated based on:

• Selected trading mode (aggressive, normal and passive)

• 24-hour trading volume of the selected pair

• Notional amount entered

• Mode-specific minimum duration requirements

Pre-Trade Analytics

• Real-time margin calculations:

  • Available Balance/Margin: The total amount of quote-asset funds available in your selected account(s) to open new positions

  • Recommended Margin: An estimate of the minimum margin required to safely execute your trade, including a dynamic safety buffer to mitigate liquidation risk

• Dynamic safety buffers based on trading mode:

  • Aggressive: 2x safety buffer

  • Normal: 1x safety buffer

  • Passive: 0.5x safety buffer

• Fee estimation before execution: Builder + maker fees for the trade

Real-Time Monitoring

• Live order status tracking with 3-second updates

• PnL calculations based on executed spreads

• Historical performance analytics and detailed table of fills

Order Creation

Select Account: Choose from your connected exchange accounts

Setting Amount to Trade:

1. There are two interconnected fields for you to input to determine how much in exchange fees you want to spend on this trade (budget) or how much volume you want to generate.

2. Volume: Total dollar value you want to generate in volume (it then calculates and displays the estimated fees involved). This amount is split equally between your buy and sell sides (e.g., $10,000 volume = $5,000 in buy orders + $5,000 in sell orders)

3. Budget: Represents the estimated fees (builder fees + exchange maker fees) you would like to spend, and how much volume that would generate. If you set a $100 budget, the bot will calculate how much volume you can generate while staying within that fee limit.

4. Which field should you use?

   • Start with Budget: If you want to control your trading costs, enter your desired fee budget first

   • Start with Volume: If you have an idea of how much notional (dollar value) of volume you would like to generate, use the volume input box.

Choose Trading Pair: Select from available spot and perpetual pairs

• For perps, the bot automatically detects set leverage, which is factored into margin calculations

Select Trading Modes

• Aggressive: Fast execution, higher costs (5% target participation rate, 5 min minimum duration)

• Normal: Balanced speed and cost (1% target participation, 15 min minimum duration)

• Passive: Slower execution, lower costs (0.5% target participation, 30 min minimum duration)

Directional Bias Control

Directional bias control allows you to influence the timing and distribution of your buy and sell orders based on your market outlook.

How Directional Bias Works

• Range: -1 to +1 (neutral at 0)

• Positive Bias (+1): Favors long positions by front-loading buy orders and back-loading sell orders

• Negative Bias (-1): Favors short positions by front-loading sell orders and back-loading buy orders

• Neutral (0): Equal timing distribution for both buy and sell orders

Additional Notes on Directional Bias

• Alpha Tilt Adjustment: Directional bias maps linearly to alpha tilt adjustments (±1 → ±0.2 alpha tilt)

• Buy Orders: Positive bias adds positive alpha tilt (front-loads), negative bias adds negative alpha tilt (back-loads)

• Sell Orders: Positive bias adds negative alpha tilt (back-loads), negative bias adds positive alpha tilt (front-loads)

• Risk Management: Extreme bias values (±1) require up to 20% additional margin to account for increased directional exposure

Use Cases

• Bullish Outlook: Set positive bias to capture upward price movements more aggressively

• Bearish Outlook: Set negative bias to benefit from downward price movements

• Market Neutral: Keep at 0 for balanced market making without directional exposure

Review Order: Check estimated fees, duration, and margin requirements

Submit Order: The bot creates simultaneous buy/sell orders

Risk and Margin Management

• Exposure Tolerance: Default 6% exposure tolerance for risk management

• Schedule Discretion: Configurable discretion levels (3-4% based on mode)

• Duration Limits: Each mode enforces a minimum duration to ensure the strategy can be executed properly

Margin Calculations

The Market Maker Bot features sophisticated margin calculations that account for directional bias and updated exposure tolerances.

Base Margin Requirements

Spot Markets:

• Exposure Tolerance: 8% (increased from 6%)

• Formula: baseMargin = notional × 0.08

• Rationale: Higher tolerance accounts for spot market volatility and margin requirements

Perpetual Markets:

• Formula: baseMargin = (notional ÷ leverage) × safetyBuffer

• Safety Buffers by Mode:

  • Aggressive: 2.0x safety buffer for higher risk tolerance

  • Normal: 1.0x safety buffer for balanced risk management

  • Passive: 0.5x safety buffer for conservative trading

Directional Bias Adjustments

• Additional Margin: Up to 20% more margin for extreme bias

• Formula: adjustedMargin = baseMargin × (1 + |directionalBias| × 0.2)

• Examples:

  • Neutral (0): No additional margin

  • Moderate Bias (±0.5): 10% additional margin

  • Extreme Bias (±1.0): 20% additional margin

Risk Monitoring

• Critical Warning: Triggered when available margin < 10% of recommended margin

• Color-coded Indicators:

  • Green: Safe (recommended < available)

  • Orange: Caution (recommended ≤ 5× available)

  • Red: Insufficient (recommended > 5× available)

Real-time Updates

Margin requirements automatically recalculate when you change:

• Notional amount

• Trading pair

• Trading mode

• Directional bias setting

• Account selection

Best Practices

• Conservative Approach: Use moderate directional bias (±0.3 to ±0.5) to minimize additional margin requirements

• Adequate Funding: Maintain available margin at least 20% above recommended margin

• Mode Selection: Choose trading modes based on your risk tolerance and available capital

• Regular Monitoring: Check margin requirements when market conditions or account balances change

Best Practices

Choosing the Right Market Conditions

• Find the Optimal Spread: An ideal market has a spread that isn't too narrow (which limits profit) but also isn't excessively wide (which may indicate very low liquidity and make it difficult to get orders filled)

• Balance Liquidity: While less liquid pairs can have profitable spreads, avoid highly illiquid markets where there may be no traders to fill your orders. Conversely, an overly crowded order book can also create too much competition, making it difficult for your orders to execute

Recommended Starting Strategy

• Notional Size: For optimal performance, a notional amount of $5,000 or more is recommended (minimum $1,000)

• A Good First Trade: For a balanced starting point, consider using the Normal mode on a top 5-20 ranked perpetual contract during periods of sideways market movement

• Spot Market Making: When trading a spot pair (e.g., ETH/USDT), you must hold at least half of the total trade value in the base asset (e.g., ETH)

• Handling Cancellations: If you cancel an order before it is complete, you are responsible for manually managing and closing any residual positions on the exchange

Order History Interface

Order List

• Paginated list of all market making orders

• Status updates every 3 seconds

• Click to view detailed order information

Order Details

• Pair: Trading pair used

• Accounts: Exchange accounts involved

• Volume: Total volume generated

• Fees: Total fees paid

• PnL: Calculated profit/loss from spreads

• Filled: Percent of order filled

• Status: Active, Completed, Cancelled, etc.

Supported Exchanges and Pairs

• Supported Exchanges: Hyperliquid, Centralized Exchanges

• Supported Pair Types: Spot, Perpetuals (Perps)

• Excluded: Futures contracts, options, and direct DEX contract addresses

Fee Structure

• Builder Fee: 0.02% (0.0002)

• Maker Fee: Exchange-specific maker rates

• Total Estimated: Builder fee + maker fee × notional amount

Troubleshooting

Insufficient Margin

• If you receive an "Insufficient Margin" error (often indicated by a red warning), your available collateral is too low. Running the bot with insufficient margin will degrade its performance and likely lead to a worse PnL. To resolve this:

  • Add more funds (collateral) to your exchange account

  • Reduce the notional amount of your order

  • Check your account's margin settings (e.g., cross vs. isolated) on the exchange website

'Paused' Status

• If you see your bot's status change to 'Paused', do not be alarmed. This is a built-in safety feature. The bot pauses itself automatically when its market exposure in one direction (long or short) grows too large. It will resume trading once its net exposure is reduced to a safe level

Insufficient Balance for Spot

• For spot market making, ensure you have at least half the recommended margin/balance in the base token to fund sell orders

Order Not Submitting

• Verify all required fields are filled, check your API key permissions, and ensure you have a sufficient balance

Order with Residuals

• Orders that are paused and later resumed may sometimes have small, unfilled residual amounts