What is a Market Maker? An introduction

A “Market Maker” is a brokerage firm, or a dealer that accepts the risk of owning a number of certain stocks, of a certain value with the purpose of facilitating the trades between its patrons.

Market Makers offer access to the great international markets and facilitates trades. It takes quota out of the market and offers it to its customers, forcing them to offer a constant buying price and selling price. A Market Maker wins from the quota difference. As such, it is the bridge between the capital market and the investor or trader. The market existence allows the growth of liquidity of this market, because, an investor that wishes to buy, EUR for example, and puts in a buying order, won’t have to wait for a buyer in order to sell the euro quantity which he desires.

The order is then taken and executed by the market maker and it will take a part of the risk and will then find a euro seller in order to close the trade. As I have mentioned before, the Forex market is the most liquid market in the world and practically situations in which the order cannot be executed instantaneously are very rare occurrences.

Market Maker

Illustration showing the way in which Market Makers act as a bridge between the Investor and the Market.

 

A further quick description as seen on Wikipedia:

Market makers that stand ready to buy and sell stocks listed on an exchange, such as the New York Stock Exchange or the London Stock Exchange, are called “third market makers.” Most stock exchanges operate on a “matched bargain” or “order driven” basis. When a buyer’s bid price meets a seller’s offer price or vice versa, the stock exchange’s matching system decides that a deal has been executed. In such a system, there may be no designated or official market makers, but market makers nevertheless exist.”

 

  • Good web site! I really love how it is easy on my eyes and the data are well written. I am wondering how I might be notified whenever a new post has been made. I’ve subscribed to your RSS which must do the trick! Have a great day! fbaaekgddgddkecd

    • GannMaster

      Thank you very much for your compliments and for taking interest in our site! Unfortunately at the moment the site is still very early in development and we have not yet implemented “proper subscription”. Over the next couple of weeks there will still be various gaps in links and areas which will be missing, but we have taken your email and will write to you as soon as we post something new and / or the site is complete. The full release should be somewhere at the end of next week. Thank you once more, and have a great day!

  • Does your website have a contact page? I’m having problems locating
    it but, I’d like to shoot you an e-mail. I’ve got some suggestions for your blog you might
    be interested in hearing. Either way, great website and
    I look forward to seeing it improve over time.

    • GannMaster

      Hi there! Thank you for taking interest in our site! For the time being please contact us at gannmasterforex@gmail.com ! We look forward to hearing from you!