Market maker

A market maker is a participant that continuously posts both buy (bid) and sell (ask) orders for an asset, standing ready to trade with others on either side. By quoting two-sided prices, market makers supply liquidity and help keep spreads narrow, making it easier for others to transact.

They typically aim to profit from the spread between their bid and ask while managing the inventory risk of holding the asset. Market making can be performed by firms, individuals, or automated programs. A common misconception is that market makers set the “true” price; they respond to and compete within supply and demand rather than dictating value.