Key Terms

Bid Price
The highest price that the Market Maker is prepared to pay for a security. The bid price is the price at which a Trader can sell a security to the Market Maker

Offer Price
The lowest price that the Market Maker is prepared to sell a security. The offer price is the price at which a Trader can buy a security from the Market Maker.

Transaction
Also known as a “trade”, this occurs when a buyer and seller agree on a price to exchange a security.

Bid-Offer Spread
Also known as an “edge”, this is the difference between the Market Maker’s bid price and offer price.

Transaction Profits
When a player buys a security for less than its ultimate value (or sells a security for more than its ultimate value), the player earns a profit.

Transaction Loss
When a player buys a security for more than its ultimate value (or sells a security for less than its ultimate value), the player earns a loss.

Overall P&L
The summation of transaction profits and losses. If this value is positive, the player has earned a net profit. If this value is negative, the player has earned a net loss. The goal of this game is to earn the highest Overall P&L.

Liquidity
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Hedging
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Speculating
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