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#Shorts #TradingTips #MarketMakers

Market makers have a very important role in providing liquidity and so they will put up bids and asks and they're making money between the transaction of that bid in that ask. So they generally make money on the spread right? And this is again very important to understand because you'll also in a lot of times see small cap stocks that have very wide spreads, especially on ones that are a lot less liquid. and this is a way for market makers to profit on a lower liquidity stock or a lower liquidity Market by having wider spreads. So when I go and buy on the ask and sell on the bid I'm losing money. But that market maker is making money and this is again just really important to know because when small caps are less liquid, it's really important for you to either one not trade them or two wait for that stock to get more liquid with a tighter spread. Where market makers you know theoretically can't have such a wide spread because they're a more organic buyers and sellers along the way..

By Stock Chat

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3 thoughts on “What are market makers?”
  1. Avataaar/Circle Created with python_avatars ginacervi says:

    Always learn something new from you Bryce.
    And I like the new lumberjack look. 🪓🪵

  2. Avataaar/Circle Created with python_avatars Reconcile mE says:

    who cares they irrelevant to plan

  3. Avataaar/Circle Created with python_avatars Barry Fagan says:

    They are the devils if trading….lol

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