I keep thinking about my friend’s question. One point I didn’t mention is the counterparty in our trades.
Can you choose/elect it?
Original post in Spanish https://mariorandholm.substack.com/p/market-makers-y-flujos-brexit-gibraltar
Market Makers and Flows: Brexit / Gibraltar
By Mario Randholm
The Great Advantage of Market Makers (MM) Over the Rest of the Market
Most retail traders operate without considering whether the market is fair or not, as if the edge could be found with experienced intuition, mathematics, statistics, or historical data…
Market Makers, on the other hand, show in their results that they are a highly consistent money-generating machine.
Look at the numbers from Virtu Financial, one of the largest Market Makers… it serves as an example for both the good and the bad:
- 1,237 positive days out of 1,238 (more than a decade).
- They basically win almost 100% of the days of the year, year after year.
And the bad side… SEC and VIRTU
- 2023: SEC press release
- 2025: SEC litigation release
You cannot participate and take money from third parties…
coming out on top without a tremendous edge.
The MMs always win, and it’s not because they guess the direction of price. Their model is much smarter:
- They neutralize inventory daily (they end almost flat in risk).
- They systematically capture the spread.
- They protect themselves when they detect informed flow (they widen spreads) and facilitate it when they don’t.
Thirdparty Interview: Peter Giacchi, Designated MM – Citadel 2022 – Hybrid Model at NYSE
Real Financial Data (Virtu Q4 2025)
- Market Making generated $1.666 billion in Adjusted Net Trading Income in 2025.
- This represents 77.7% of the company’s total trading revenue.
- It grew 39.4% compared to the previous year.
Meanwhile, on the other side of the trade… the typical retail day trader / swing trader:
- In 2020, it’s said that 72% ended the year with losses (though I haven’t been able to verify this…).
- In FX and accounts over 50k at IBKR, this data appears (IB doesn’t pay me * no conflict of interest). If you know other brokers or regulators that report this, let me know…
BREXIT (January 31, 2020) and the Campo de Gibraltar, the Gibraltar airport, and the port of Gibraltar have had free flow of people and integrated workers into the Schengen Area since last week.
Gibraltar is exactly the same key nuance as market makers: privileged access to the system without formally being a full member of the same regime as everyone else.
A DMM/Market Maker is not just any “trader” inside the market…
…because they do not compete on equal terms with the rest of the participants. They have privileged access to the order book, special obligations (quoting at the NBBO, providing liquidity at openings/closings) in exchange for structural exemptions: liquidity rebates, priority at certain price levels, near real-time flow information.
The physical border in Gibraltar has disappeared, but the control has moved to the airport and the port…
… it’s not that friction no longer exists, it has just been relocated and is now jointly managed by the United Kingdom/Gibraltar and Spain. It reminds me of the logic of a Market Maker’s dynamic spread.
To close this post (I’m not a borders expert), the comparison between the MM and Gibraltar’s legal structure are examples of “privileged access without formal symmetric membership”: the EU-UK agreement gives Gibraltar the advantages of Schengen (free movement, no routine controls) without the full obligations of membership (migration policy, Schengen Information System, etc.) while keeping British sovereignty intact.
A DMM obtains the advantages of operating inside the central market (priority, rebates, information) without the disadvantages suffered by any other participant (full spread, directional exposure without instant hedging).
In both cases, someone designed the system so that a specific actor, for structural reasons, obtains preferential treatment within a framework that, from the outside, appears “open to everyone.”
The Conclusion Is Serious but Clear:
When you trade intraday or short-term against participants who win almost every day of the year, statistically you are on the losing side of the equation. You have to understand it, accept it, and have a plan to solve it.
Market Makers don’t need to get the direction right; they just need to manage flow, spread, and risk better than you. And if they don’t, simplifying: they can create or destroy shares to manage their own risk. That’s why those of us who survive and prosper in this game understand something key: it’s not just about having “better setups” or “better psychology.” It’s about understanding who you’re trading against and how to balance the scales in your favor with measured edge, risk management, and multiple timeframes where other market participants can corner them more than you.
The market is neither fair nor almost predictable.
There’s one thing you have to understand: those who have the structure and the structural advantage end up eating those who don’t. Do you want to keep trading like the average retail trader, or do you prefer to understand how those on the other side think and operate?
Trading changes when you change your perspective.
And
NOBODY CAN TEACH YOU HOW TO MAKE MONEY WITH CERTAINTY BECAUSE MOST OF THE TIME IT SEEMS LIKE THERE’S MORE THAN ONE WINNER IN THE “CASINO.”
Best Regards,,
Mario
