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By being a market maker, I mean when I post a limit order, someone could take your order. For example, suppose during this second the bid-ask is 1,1.01 constantly and I posted a limit order to buy at 1. If I am not trading as a market maker, that order would not be filled. If I am, it may be filled if someone else post an market sell order.

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  • $\begingroup$ In equities there are many legal requirements. First you would have to register as a broker/dealer with the SEC. Then the Broker dealer would apply to FINRA and a market venue such as Nasdaq for status as a market maker. You would have to show that you have sufficient capital and meet some other SEC requirements. Once approved Nasdaq would give you a terminal in which you can enter your bids and offers and have them show up on their system to be disseminated throughout the world and people can see and hit your quotes. $\endgroup$ – noob2 Oct 27 '16 at 22:36
  • $\begingroup$ Actually, all I want to do is that I want to be able to post an limit order that could be matched by the exchange… Why must I become a broker/dealer to serve other clients? I just want to act as a HFT firm that could post "actual" limit order so as not to pay the bid-ask spread.... $\endgroup$ – user40780 Oct 27 '16 at 23:55
  • $\begingroup$ What is your end goal here? It seems you are just willing to place a limit order, not to act as a market maker... $\endgroup$ – SRKX Oct 28 '16 at 4:03
  • $\begingroup$ @SRKX I'm coming to the same conclusion as you; I think they have market maker confused with liquidity maker. $\endgroup$ – MD-Tech Oct 28 '16 at 9:04
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    $\begingroup$ @MD-Tech well what he's describing above is simply placing a limit order which essentially being a market participant... $\endgroup$ – SRKX Oct 28 '16 at 9:12
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The best training I have heard of for this, other than managing to get a job on the desk is ACI Dealing Simulation Course. That would answer all your questions.

The problem you have is that as a market taker, you're right, you can post buy and sell orders simultaneously as if you're a market maker. Who is your client though? If you're posting orders on an exchange and the market moves too quickly, you'll get put into a position when the market is going against you, which you won't be able to get out of without losing money.

This reminds me of General Patton's speech (google it). The point is to make the other son of bitch lose money, not you.

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Since the comments answered the equities portion. I'll focus on forex.

First you would need sufficient capital to setup a prime broker or prime of prime relationship. The capital requirement and regulatory requirements here varies across country.

Second, since in the forex world there is no centralized exchange. You would need to convince each individual ECN, market maker or big bank, exc. exc. to allow you to provide liquidity to them. Each firm will have its own set of requirements.

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