This is a short excerpt from a YouTube video by Kosta Ouzas explaining market-maker behavior in consolidation zones. The speaker describes internal liquidity dynamics: market makers avoid taking inventory until they can offset positions, enter consolidation zones to pick up opposite-side liquidity (wholesale buyers/sellers), then disperse inventory later — essentially a buy-low, sell-high approach used to rebalance inventories.
From a simple business model of buy low, sell high. This is internal liquidity, and so is some here. Right. We're going to take a look at that. If you think about it, we had a major concentration of liquidity right here. This could throw off of. This could rebalance a portfolio for a market maker. Right. Or an institution. So they're not just going to move into that inventory until they have offsetting inventory to balance it out. That's why a market enters into this consolidation zone. That gives them an opportunity to pick up the opposite side, these wholesale buyer, wholesale sellers here, selling below fair value, and then they're able to disperse that inventory here. Okay, so we're doing it again. They're doing it again.
