@adalberto
In hummingbot, we will be market makers.
Why market makers build strategies that adjust spreads?
for several key reasons:
1. To Manage Risk:
Increased Volatility = Increased Risk: When markets are volatile, prices fluctuate rapidly and unpredictably. Wider spreads help market makers compensate for the increased risk of adverse price movements that could lead to losses.
Protect Against Slippage: Volatility can cause significant slippage, meaning the price at which an order is executed may differ from the expected price. Wider spreads provide a buffer against slippage, ensuring the market maker still captures profit despite price fluctuations.
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