Perpetual Market Maker Strategy

The Perp Market Maker is a sophisticated two-sided market making strategy that profits from bid-ask spreads while using advanced microstructure analysis to avoid adverse selection.

This is an advanced strategy with 100+ parameters. We recommend starting with a preset and small position sizes until you understand the behavior.

How Market Making Works

The Basic Concept

Market makers provide liquidity by quoting both buy (bid) and sell (ask) prices. You profit from the spread between them:

         ASK: $100.10 ← You SELL here
              │
    SPREAD ───┼─── $0.10 (10 bps) = Your profit!
              │
         BID: $100.00 ← You BUY here

Example Trade Cycle:

You place BID at $100.00, ASK at$ 100.10
Someone sells to you at $100.00 (you now own the asset)
Someone buys from you at $100.10 (you sell the asset)
Net profit: $0.10 per unit (minus fees)

Why It’s Complex

The challenge: if price moves against you, you lose more than the spread profit.

GOOD SCENARIO:              BAD SCENARIO:
Price bounces in range      Price trends away

    $100.10 ─ SELL ✓            $100.10 ─ Your ASK (not filled)
        │                           │
    $100.00 ─ BUY ✓                 │ Price drops...
                                    │
    Profit: $0.10              $99.00 ─ You're stuck long!
                               Loss: $1.00 (10x the spread)

This is why the Perp MM has 100+ parameters - to detect and avoid bad scenarios.

Core Configuration

Position Limits

max_position_usdt

float

default:"1000"

Maximum position size in USDT. Hard ceiling - bot will not exceed this.

quote_size_usdt

float

default:"25"

Size of each quote order in USDT.

leverage

integer

default:"75"

Leverage multiplier. Higher = more capital efficiency but higher liquidation risk.

Equity-Based Sizing (New in v7)

proactive_multilevel.equity_pct

float

default:"0"

The Growth Engine - Percentage of account equity to use for grid sizing.

0 = Legacy behavior (uses base_size_pct)
5.0 = 5% of account equity per grid cycle
10.0 = 10% of account equity per grid cycle

Why it matters: As your account grows from profits, position sizes automatically scale up!

Effective Exposure Formula:

effective_exposure = equity_pct × leverage

Example:

5% equity_pct × 75x leverage = 375% effective exposure
A 1% adverse move costs: 3.75% of your account

Use the Scaling Agent (/set equity_pct 5) to easily adjust this parameter. See Scaling Agent docs.

Fee Configuration

maker_fee_bps

integer

default:"2"

Maker fee in basis points. BloFin: 2 bps, Bybit: 2 bps

taker_fee_bps

integer

default:"6"

Taker fee in basis points. BloFin: 6 bps, Bybit: 5.5 bps

min_profitable_spread_bps

integer

default:"10"

Minimum spread required to quote. Must cover round-trip fees + profit.

Spread Configuration

base_spread_bps

integer

default:"15"

Base spread from mid-price in basis points.

min_spread_bps

integer

default:"8"

Minimum allowed spread (floor).

max_spread_bps

integer

default:"50"

Maximum allowed spread (ceiling).

inventory_skew_factor

float

default:"1.5"

How much to skew spread based on inventory. Higher = more aggressive rebalancing.

Loss Management Tiers

The bot uses a tiered loss management system that progressively reduces risk as losses accumulate:

Loss Depth    │ Tier   │ Action
──────────────┼────────┼─────────────────────────────
0-100 bps     │ Normal │ Standard trading
100-300 bps   │ Tier 1 │ Widen spreads, reduce size
300-600 bps   │ Tier 2 │ Stop new entries, defend only
600+ bps      │ Tier 3 │ Exit priority, minimal quotes
1000 bps      │ HARD   │ Emergency close ALL

Configuration

loss_management.enabled

boolean

default:"true"

Enable tiered loss management.

loss_management.tier_1_bps

integer

default:"100"

First tier threshold (1% loss).

loss_management.tier_2_bps

integer

default:"300"

Second tier threshold (3% loss).

loss_management.tier_3_bps

integer

default:"600"

Third tier threshold (6% loss).

loss_management.hard_stop_loss_bps

integer

default:"1000"

Emergency exit threshold (10% loss). No exceptions.

Time Decay System

Positions that age without profit are progressively exited:

Position Age    │ Action
────────────────┼────────────────────────────
< 24 hours      │ Wait for TP
24-48 hours     │ Tighten TP target
48 hours        │ Exit at breakeven if possible
48-72 hours     │ Accept small loss exit
72+ hours       │ Force exit (market order)

time_decay.enabled

boolean

default:"true"

Enable time-based exits.

time_decay.force_exit_enabled

boolean

default:"true"

Easy toggle for force exit. Set to false to let positions run indefinitely.

time_decay.breakeven_after_seconds

integer

default:"172800"

Exit at breakeven after this many seconds (48 hours).

time_decay.exit_loss_after_seconds

integer

default:"28800"

Accept loss exit after this many seconds (8 hours).

time_decay.force_exit_after_seconds

integer

default:"86400"

Force market exit after this many seconds (24 hours).

Standard Time Decay Values (v7):

Breakeven: 48 hours (172800 seconds)
Exit Loss: 8 hours (28800 seconds)
Force Exit: 48 hours (172800 seconds)

These values prevent positions from aging indefinitely while giving trades adequate time to recover.

Advanced Detection Systems

Whale Detection

The bot detects large orders (“whale walls”) and positions near them for better fill probability:

Orderbook Depth:
    │
    │         ████████████ ← WHALE WALL (large bid)
    │      ███
    │   ██
    │  █
    └──────────────────────
       Price

Bot places orders NEAR whale walls for support/resistance.

whale_frontrun.enabled

boolean

default:"true"

Enable whale wall detection.

whale_frontrun.min_whale_volume_usdt

integer

default:"3000"

Minimum wall size to consider (in USDT).

Trap Detection

Detects when you’re being “trapped” - adverse fills that immediately move against you:

trap_detector.enabled

boolean

default:"true"

Enable trap detection.

trap_detector.toxicity_threshold_bps

integer

default:"15"

Exit if fill toxicity exceeds this level.

Cascade Detection

Detects liquidation cascades (multiple forced liquidations causing rapid price movement):

cascade_hunter.enabled

boolean

default:"true"

Enable cascade detection.

Geometric Multi-Level Quoting

Instead of single quotes, place multiple levels for better fill rates:

Level │ Distance │ Size
──────┼──────────┼─────
L1    │ 10 bps   │ $50  (closest to price)
L2    │ 20 bps   │ $40
L3    │ 35 bps   │ $32
L4    │ 55 bps   │ $26
L5    │ 80 bps   │ $21  (furthest from price)

geometric_sizing.enabled

boolean

default:"true"

Enable geometric multi-level quoting.

geometric_sizing.decay_factor

float

default:"0.92"

Size reduction per level. 0.92 = each level is 92% of previous.

geometric_sizing.max_levels

integer

default:"50"

Maximum number of quote levels.

XGrid Counter Scalp

When the main position is underwater and XGrid detects an opposite trend, the bot can open a counter-position to scalp profits while waiting for recovery:

Main Position: LONG -5% underwater
XGrid Signal: SHORT (trend down)
         │
    ┌────┴────┐
    │ COUNTER │
    │  SCALP  │
    └────┬────┘
         │
    Open SHORT position (30-50% of main)
    Quick TP at 5-10 bps
    Offset some losses while waiting

xgrid_counter_scalp.enabled

boolean

default:"false"

Enable counter-trend scalping.

xgrid_counter_scalp.max_counter_pct

integer

default:"50"

Maximum counter position as % of main position.

xgrid_counter_scalp.min_main_age_seconds

integer

default:"300"

Main position must be this old before counter-scalping (5 min).

Preset Configurations

v7 Long Short Counterscalp (Recommended)

The latest preset with equity-based sizing and XGrid counter scalp:

BloFin v7
Bybit v7

{
  "strategy": "perp_mm",
  "leverage": 75,
  "proactive_multilevel": {
    "equity_pct": 5.0,
    "levels": 5
  },
  "spread": {
    "base_spread_bps": 15,
    "min_spread_bps": 8
  },
  "fees": {
    "maker_fee_bps": 2,
    "taker_fee_bps": 6
  },
  "xgrid_counter_scalp": {
    "enabled": true,
    "max_counter_pct": 50
  },
  "reactive_spacing": {
    "enabled": true,
    "max_multiplier": 10.0
  },
  "loss_management": {
    "tier_1_bps": 100,
    "tier_2_bps": 300,
    "tier_3_bps": 600,
    "hard_stop_loss_bps": 1000
  },
  "time_decay": {
    "breakeven_after_seconds": 28800,
    "exit_loss_after_seconds": 28800,
    "force_exit_after_seconds": 86400,
    "force_exit_enabled": true
  }
}

{
  "strategy": "perp_mm",
  "leverage": 50,
  "proactive_multilevel": {
    "equity_pct": 5.0,
    "levels": 5
  },
  "spread": {
    "base_spread_bps": 18,
    "min_spread_bps": 10
  },
  "fees": {
    "maker_fee_bps": 2,
    "taker_fee_bps": 5.5
  },
  "xgrid_counter_scalp": {
    "enabled": true,
    "max_counter_pct": 50
  },
  "reactive_spacing": {
    "enabled": true,
    "max_multiplier": 10.0
  },
  "loss_management": {
    "tier_1_bps": 100,
    "tier_2_bps": 300,
    "tier_3_bps": 600,
    "hard_stop_loss_bps": 1000
  },
  "time_decay": {
    "breakeven_after_seconds": 28800,
    "exit_loss_after_seconds": 28800,
    "force_exit_after_seconds": 86400,
    "force_exit_enabled": true
  }
}

v7 Key Features:

equity_pct: 5.0 - Grids sized as 5% of account equity
xgrid_counter_scalp: enabled - Automatic hedging
reactive_spacing.max_multiplier: 10 - Wide spread range for volatility
time_decay: 8h/8h/24h - Standard aging exits

HFT v6 (High Frequency)

{
  "enabled": true,
  "max_position_usdt": 2000,
  "quote_size_usdt": 10,
  "leverage": 75,
  "base_spread_bps": 12,
  "min_spread_bps": 7,
  "maker_fee_bps": 2,
  "taker_fee_bps": 6,
  "geometric_sizing": {
    "enabled": true,
    "decay_factor": 0.92,
    "max_levels": 50
  },
  "loss_management": {
    "enabled": true,
    "tier_1_bps": 100,
    "tier_2_bps": 300,
    "tier_3_bps": 600,
    "hard_stop_loss_bps": 1000
  },
  "time_decay": {
    "enabled": true,
    "breakeven_after_seconds": 28800,
    "exit_loss_after_seconds": 28800,
    "force_exit_after_seconds": 86400
  }
}

Risk Management Best Practices

Position Sizing

Never risk more than 2% of your account on a single position.Formula: max_position = account_balance * 0.02 / (leverage / 100)Example:

10,000 account at 75x leverage → max

150 per position

Exchange-Specific Notes

BloFin:

Maker fee: 2 bps, Taker fee: 6 bps
Supports hedge mode
Password required for API

Bybit:

Maker fee: 2 bps, Taker fee: 5.5 bps
Supports hedge mode
Lower maximum leverage (50x vs 75x)

Troubleshooting

”Spread too tight, not quoting”

Your min_profitable_spread_bps is higher than current market spread.

Solution: Lower min_profitable_spread_bps or trade during higher volatility

”Position stuck at loss”

Check loss management tier - may be in defensive mode
Enable time decay if not already
Check if XGrid counter scalp can help offset losses

”Orders keep getting cancelled”

Check exchange rate limits
Reduce geometric_max_levels to place fewer orders
Increase quote refresh interval

Next Steps

Scaling Agent

Interactive AI assistant to optimize your settings

Full Config Reference

All 100+ parameters explained

Loss Management

Risk management deep dive

Bot Management

Start and manage your bots

Get Started

Strategies

Features

Bot Configuration

Risk Management

Exchange Setup

Help & Support

​Perpetual Market Maker Strategy

​How Market Making Works

​The Basic Concept

​Why It’s Complex

​Core Configuration

​Position Limits

​Equity-Based Sizing (New in v7)

​Fee Configuration

​Spread Configuration

​Loss Management Tiers

​Configuration

​Time Decay System

​Advanced Detection Systems

​Whale Detection

​Trap Detection

​Cascade Detection

​Geometric Multi-Level Quoting

​XGrid Counter Scalp

​Preset Configurations

​v7 Long Short Counterscalp (Recommended)

​HFT v6 (High Frequency)

​Risk Management Best Practices

​Position Sizing

​Exchange-Specific Notes

​Troubleshooting

​”Spread too tight, not quoting”

​”Position stuck at loss”

​”Orders keep getting cancelled”

​Next Steps

Scaling Agent

Full Config Reference

Loss Management

Bot Management

Perpetual Market Maker Strategy

How Market Making Works

The Basic Concept

Why It’s Complex

Core Configuration

Position Limits

Equity-Based Sizing (New in v7)

Fee Configuration

Spread Configuration

Loss Management Tiers

Configuration

Time Decay System

Advanced Detection Systems

Whale Detection

Trap Detection

Cascade Detection

Geometric Multi-Level Quoting

XGrid Counter Scalp

Preset Configurations

v7 Long Short Counterscalp (Recommended)

HFT v6 (High Frequency)

Risk Management Best Practices

Position Sizing

Exchange-Specific Notes

Troubleshooting

”Spread too tight, not quoting”

”Position stuck at loss”

”Orders keep getting cancelled”

Next Steps