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:
“A sentimentalist, my dear Darlington, is a man who sees an absurd value in everything, and doesn’t know the market price of any single thing.”
—Oscar Wilde (1854–1900)
“The crew was complete: it included a Boots—
A maker of Bonnets and Hoods—
A Barrister, brought to arrange their disputes—
And a Broker, to value their goods.”
—Lewis Carroll [Charles Lutwidge Dodgson] (1832–1898)
“Nowadays love is a matter of chance, matrimony a matter of money and divorce a matter of course.”
—Helen Rowland (1875–1950)