How does a market making bot manage market volatility?

Blockchain and Cryptocurrency

Source: How does a market making bot manage market volatility?

In market making bot development, managing market volatility is crucial for maintaining profitability. A market making bot adjusts its bid-ask spread dynamically, widening it during high volatility to account for rapid price swings and reducing exposure to sudden losses. It may also use stop-loss mechanisms to minimize risk, automatically pausing trading if market conditions become too unstable.

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