Market maker

Market maker

A market maker is a company (often a broker) that quotes an ask and bid price for a financial instrument with the specific objective of profiting from the difference between the two. The ask and bid price are the terms used for the buy and sell price. The difference between them is called the spread.

If you sell a financial security, the market maker will take the other side of your position and then seek to offset the risk by finding a buyer. Similarly, if you purchase a financial instrument, then the market maker will sell from their inventory and then seek to offset the position to find a buyer.

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