What is a Market Maker?
In order for market participants, such as investors, to buy or sell a stock or bond there must be somebody whose willing to trade with them. This person is called a Market Maker.
A market maker is a trader who constantly provides prices where he is willing to both buy and sell. He’s willing to do this in any market condition. He’s willing to act as an intermediary between two market participants or he’s willing to trade for his own account. This means that market participants have the ability to trade when they need to.
In most markets there are more than one market maker. This creates competition to give market participants the best prices.
Remember, market makers help the market function by constantly providing prices so that market participants can trade when they need to.
Have fun trading stocks while playing Trading Day, our free stock market game.