Oct 08, 2026 by Offer

IMC Market Making Game 2027: Urn Question Strategy

The IMC Trading market making urn question — commonly reported by candidates as "An urn has 100 marbles, red and blue in unknown split. Make me a market on the number of red marbles" — is played in three phases: open wide around your prior (50), tighten as flow reveals information, and skew quotes to manage inventory.

What This IMC Trading Market Making Urn Question Assesses

This is market making in miniature: pricing under uncertainty, adverse selection (the interviewer may know the true count), and inventory management. IMC tests whether you understand that your quotes are both prices and information-gathering tools — every trade teaches you something about the true number.

How to Answer This IMC Trading Market Making Urn Question

Play it like a professional:

Phase 1 — Open on the prior. With a uniform prior over 0–100, your best estimate is 50. Open something like 45–55: centered on 50, wide enough to survive being wrong. Example line: "No information, so my prior centers at 50 — I'll make 45 bid, 55 ask to start."
Phase 2 — Update on flow. If the interviewer keeps buying (lifting your ask), the true count is likely above your mid — raise it. Repeated selling means lower it. Narrate each move: "Bought twice at 55 — moving my market to 52–60."
Phase 3 — Manage inventory. If you accumulate a big long position in "red marbles," shade your quotes down to attract sellers and flatten out. A market maker with a huge one-sided book is speculating, not making markets.

The key insight to voice: you're not trying to guess the number — you're trying to earn the spread while letting order flow pull your mid toward the truth.

Common Mistakes

Quoting too tight initially. With maximum uncertainty, tight spreads get arbitraged by anyone with a hint of information — width is protection early.
Never moving the mid. Keeping 45–55 after being bought five times shows you're ignoring the most valuable signal in the game.
Forgetting adverse selection. The interviewer trades with you for a reason — assume every trade carries information and price that in.

Candidates commonly report that the interviewer probes the quotes to find stale prices, then asks "why did you move?" Your updating logic must be articulable at every step — "flow told me my mid was low" is always a valid answer.

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FAQ

What spread should I open with? Wide enough that early informed flow doesn't bankrupt you, tight enough to actually trade — 45–55 (±10%) is a sensible start with zero information.

Should my market stay symmetric? Only when your inventory is flat and flow is balanced. Skew quotes to manage position: long reds → lower both bid and ask to attract sellers.

What if the interviewer never trades? Tighten gradually — an untraded wide market teaches nothing. The spread is a discovery tool, not just a profit margin.

How is this scored? On final P&L, but mostly on process: prior-based opening, flow-driven updating, spread discipline, and inventory awareness.

Preparing for IMC Trading's interview? Our 2027 IMC Trading Assessment BrainsFirst Games NeurOlympics Exact Questions and Answers has practice questions and answers — $79 one-time, instant download.