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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
A firm that always offers to buy and sell a stock, providing liquidity.
Why It Matters
Market makers are the reason you can buy or sell stocks instantly. They constantly quote both buy and sell prices, profiting from the spread. Without them, you'd have to wait for another human to take the other side of your trade. Major market makers like Citadel Securities and Virtu handle enormous volumes, making markets more efficient for everyone.
Key Points
- They profit from the bid-ask spread - buying at bid, selling at ask, thousands of times per second
- Market makers are required to maintain 'orderly markets' - they must keep trading even when volatile
- Your broker may route your order to a market maker who pays for the privilege (payment for order flow)
Related Terms
Common Questions
A firm that always offers to buy and sell a stock, providing liquidity. Market makers are the reason you can buy or sell stocks instantly. They constantly quote both buy and sell prices, profiting from the spread.
Market makers are the reason you can buy or sell stocks instantly. They constantly quote both buy and sell prices, profiting from the spread. Without them, you'd have to wait for another human to take the other side of your trade. Major market makers like Citadel Securities and Virtu handle enormous volumes, making markets more efficient for everyone.
They profit from the bid-ask spread - buying at bid, selling at ask, thousands of times per second
Market makers are required to maintain 'orderly markets' - they must keep trading even when volatile
Your broker may route your order to a market maker who pays for the privilege (payment for order flow)