Stand by your quote
Definition · Level 13 · Interview mechanics
Keep reading with Tradecraft
Without a subscription, you can read three definitions every 30 days. Tradecraft explains all 988 terms and strategies, with the lessons that teach them, flashcards that come back before you forget, quizzes and a payoff lab.
A price you show is a promise: if the other side trades on it, confirm the trade and say your position, then re-quote. Taking a price back after someone has traded on it breaks trust.
Example
“Done — you buy ten at 7.5, I’m short ten. Now 7 at 8.”
Where Tradecraft teaches it
Level 13 · Interview mechanics, in the lesson “Market-making games: trades, edge and adverse selection”: What a hit or a lift does to your position, how to measure edge, and how to react to a buyer who may know more.
Related terms
- EdgeExpected profit on a trade: the distance between the price you dealt at and fair value, times size (and the value of a point).
- Information vs inventoryAfter a trade, ask two separate questions.
- Skewing a quoteShifting both sides of your quote in one direction to work off a position: up after you have sold (to attract sellers), down after you have bought.
- √2, √3 and e≈ 1.414, ≈ 1.732 and ≈ 2.718. With independent returns, volatility over two or three periods is one-period volatility times the first or the second…
- √252≈ 15.87: the factor between daily and annual volatility on trading days (the United States has about 252 a year; European exchanges 250 to 255)…
- √365≈ 19.1 — the calendar-day annualization factor, for markets that trade every day (crypto) or quantities measured over all days of the year, weekends…