Bid Ask Games in Trading Interviews and How to Play Them

A bid ask game scores width discipline, position tracking, and whether a candidate widens their market after being traded against.

A bid ask game asks you to quote a two-sided market on a quantity you cannot look up, then trade against your own quote as the interviewer buys or sells into it, updates your position, and re-quotes based on what just happened. The skill being scored is whether your quoted width is disciplined, whether you track your position correctly after every trade, and whether you widen your market after being hit rather than quoting the same width again out of habit.

The interviewer states a quantity with genuine uncertainty attached to it, something like the number of gas stations in a named city, and asks you to make a market: a bid price at which you will buy and an ask price at which you will sell, with a size attached to each. You do not get to see the true answer. Your only information is your own estimate and whatever the interviewer's trades against you reveal.

Once you quote, the interviewer chooses to buy at your ask, sell at your bid, or pass, and they can trade multiple times across the conversation. Each trade changes your position and, if you are reasoning correctly, should change your next quote.

Say the interviewer asks for a market on the number of gas stations in a mid-sized city, and your honest estimate, built from a quick population and density calculation, centers on 350 with real uncertainty on either side. A reasonable opening quote is 320 at 380, a width of 60 around your estimated fair value of 350.

The interviewer buys 10 units at your ask of 380. You are now short 10 units at an average price of 380, and the trade itself is information: the interviewer was willing to pay 380, which either means the true number is higher than you think or means they are testing whether you defend a bad price. Either way, the correct response is to move your whole market up and widen it, for instance to 350 at 420. You are not lowering your estimate of fair value just because you got hit at the top of your old range, and you are widening because you have already been wrong once and the next trade carries more risk to you while you are short.