Forex trading involves risk. Losses can exceed deposits

Market maker definition

Forex trading involves risk. Losses can exceed deposits

What is market maker?

A market maker is an individual or institution that buys and sells large amounts of a particular asset in order to facilitate liquidity.

Market makers tend to be in control of a certain amount of the asset (or assets) that they trade in. By displaying a buy and sell quote and executing trades at that price extremely quickly, market makers represent a straightforward way to place trades.

How do market makers make money?

To compensate for the risk of buying an asset that may devalue, market makers maintain a spread on the assets that they enable you to trade.

For example, a market maker may offer to purchase 100 equities from you at $100 each (the ask price), and then offer to sell them to a buyer at $100.05 (the bid price). Though this is only a $0.05 difference, in high-volume trading, the profits will soon add up. We use market makers for the pricing of some illiquid equities.

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