Definition
Market makers are broker-dealers that maintain firm bid and ask quotes for securities, committing to buy and sell at their quoted prices. They profit from the bid-ask spread while providing liquidity and facilitating orderly markets. Market makers must maintain quotes even during volatile conditions, helping reduce spreads and ensure buyers and sellers can always trade. On the NYSE, specialists serve this role, while NASDAQ has competing market makers for each stock.
Formula
Example
A market maker quotes $50.00 bid / $50.02 ask for a stock. When investors buy at $50.02 and others sell at $50.00, the market maker earns $0.02 per share while providing immediate liquidity to both parties.
FAQ
What is Market Maker?
A firm that continuously quotes buy and sell prices for a security, providing liquidity.
How do you calculate Market Maker?
A common formula for Market Maker is: 做市商利润 = (卖出价 - 买入价) x 交易量 - 风险成本
Why is Market Maker important?
Market Maker helps investors evaluate market structure and make more informed decisions.