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Level 13 · ◆◆◆◆ · ~13 min

Kyle's Lambda & Price Impact

Kyle's Lambda & Price Impact

"One number that says how much a market moves per unit of net buying — the single most useful measure of liquidity ever written down."

Kyle's model: informed trader, noise traders, market makerlambda as price impact per unit of order flowmarket depth as 1/lambdawhy the informed trader trades graduallypermanent vs temporary impact
🚀 You're jumping ahead. This builds on The Spread Open — but play it now and you'll still earn full XP. If it feels steep, those make a gentler on-ramp.

A short lesson, then a quiz. ❤️×3 — a wrong answer costs a heart; finish with at least one left and the level is yours. Lose all three and you'll have to try again. Replay any time — XP and cleared levels are never lost.