How A Market Maker Makes Money
A market maker aims to make money by buying stock at a lower price than the price at which they sell it, or selling the stock at a higher price than they buy it back. Ordinarily, they can make money in both rising or falling markets, by taking advantage of the difference between "bid" and "offer" prices.
Stock market makers also receive liquidity rebates from electronic communication networks (ECN) for each share that is sold to or purchased from each posted bid or offer. Conversely, a trader who takes liquidity from a bid or offer posted on an ECN is charged a fee for removing that liquidity.
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Famous quotes containing the words market, maker and/or money:
“The only reason to invest in the market is because you think you know something others don’t.”
—R. Foster Winans (b. 1948)
“But the lightning which explodes and fashions planets, maker of planets and suns, is in him. On one side elemental order, sandstone and granite, rock-ledges, peat-bog, forest, sea and shore; and on the other part, thought, the spirit which composes and decomposes nature,—here they are, side by side, god and devil, mind and matter, king and conspirator, belt and spasm, riding peacefully together in the eye and brain of every man.”
—Ralph Waldo Emerson (1803–1882)
“The notion of making money by popular work, and then retiring to do good work, is the most familiar of all the devil’s traps for artists.”
—Logan Pearsall Smith (1865–1946)