Encyclopedia Classification
Category: Advanced Trading • Market Infrastructure • Market Mechanics
Discipline: Market Microstructure • Liquidity Provision • Exchange Operations • Institutional Trading
Prerequisites
-
Article 153 — Liquidity Analysis: How Markets Hunt Stops, Create Traps, and Move Capital
-
Article 156 — Volume Profile: Understanding Where the Market Actually Trades
-
Article 157 — Order Flow: Understanding the Battle Between Buyers and Sellers
Related Articles
Liquidity Pools • Order Books • Automated Market Makers • Exchange Mechanics • Institutional Execution
Definition
A market maker is a participant that provides liquidity to financial markets by continuously offering to buy and sell assets.
Market makers help markets function by:
-
Creating available buyers and sellers
-
Reducing spreads
-
Improving execution speed
-
Maintaining market efficiency
Beginner Explanation
Imagine a marketplace where nobody is willing to buy your Bitcoin.
You own:
1 BTC
Current price:
\$100,000
You want to sell.
But:
No buyer exists.
The market cannot function efficiently.
A market maker helps solve this problem by constantly providing:
"I will buy at this price."
"I will sell at this price."
They create the marketplace itself.
Keep reading — unlock all of Volume III
The opening sections of every Volume III article are free. Drop your name and email to unlock the rest of this article — and all 100 advanced articles — instantly. We'll also send you the designed PDF edition of Volume III and you'll join The CGH Brief. No spam, unsubscribe anytime.