ModelBeginner
Market Maker
An entity that continuously quotes both buy and sell prices, profiting from the spread and providing liquidity to the market.
Last updated: February 1, 2026
1
The market maker continuously quotes both a bid and ask price for an asset.
2
They profit from the spread between these two prices.
3
When a trader buys, the market maker sells from its inventory; when a trader sells, the market maker buys.
4
The market maker manages risk by adjusting quotes based on inventory, market conditions, and flow toxicity.
5
In broker context, "market making" often means the broker is acting as the counterparty (B-book).