Market maker
A market maker quotes a price to buy and a slightly higher price to sell all day and earns the spread. Since US prices moved to one-cent steps in 2001 they are computers, they hedge every fill so they hold no view, and they pull quotes when they cannot predict the next minute. Where options pile up at one strike, their hedging can pin the stock.
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In the help centreSee the order types available on MochatradeRelated terms
- HedgingHedging is taking a second position that loses when your first one wins, to cut risk. Market makers hedge every fill…
- Bid-ask spreadThe bid-ask spread is the gap between the best price to sell (bid) and the best price to buy (ask). Buy at the ask…
- LiquidityLiquidity is how much you can trade without moving the price: a tight spread and deep size at each level. US…
- Long and short positionA long position profits when the price rises; a short position profits when it falls. On a contract on the price…
- Short sellingShort selling is selling a borrowed share to buy it back cheaper. The loss is open-ended if the price rises, the…
- US ETFA US ETF is an exchange-traded fund on a US exchange that holds a basket, usually an index, and trades all day like…
Educational content only. Not investment advice. Leveraged products magnify losses as well as gains.