Automated Market Making

1.1 Fundamental Value Fundamental Value (FV) is the intrinsic value of a listed security determined through fundamental analysis without reference to its market value. I assume that at any time point t, bid/ask price of the security fluctuates around its time-t fundamental value. When bid size is significantly larger, i.e., bs >> as, its FV is fairly close to the ask price, as most ask orders are executed already, and vice versa. Generally, FV is not necessary between its bid and ask price, further not between its buy and sell price, which potentially gives buy/sell signals.