Trader's Glossary

Market Maker (MM)

Market Makers are brokers that act as counterparties to the trades of their clients. Market Makers profit from setting the bid/ask spread, but they also profit from the losses that their clients incur. As counterparty they take the opposite side of their clients’ trades, i.e. buying when a client sells and selling when they buy, but Market Makers also manage their risk exposure by sometimes holding onto orders entirely and trading directly against their clients.