Spread Capture Strategy

Spread Capture Strategy is a method used by market makers to profit from the difference between the bid and ask prices. By consistently providing liquidity at both sides of the market, the trader earns the spread on every completed transaction.

The goal is to keep the inventory neutral and capture as many small spreads as possible over time. In high-frequency trading, this is often done using algorithms that automatically adjust quotes based on the current market state.

Success depends on maintaining a high volume of trades and keeping the risk of adverse selection low. It is a foundational strategy in market making that relies on the consistent demand for liquidity from other market participants.