Investor Glossary-market makerInvestor Glossary-market makerInvestor Glossary-market makerInvestor Glossary-market makerInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Market Maker

The HTML to link to this page
 

A market maker brings continueous liquidity to the trading market of a particular stock by standing ready to buy or sell shares any time markets are open at any publicly quoted price. To qualify as a market maker, a brokerage firm is required to buy or sell shares regardless of whether or not it has customer orders. If there are no customer orders, the shares become part of the market maker's stock inventory. NASDAQ and OTC stocks rely exclusively on the market maker system to create an orderly trading market for their shares. Most NASDAQ companies have more than one market maker. The market maker reduces risk associated with price fluctations by maintaining a bid-ask spread on each stock it covers. The difference between the ask and bid price is profit the market maker pockets as compensation for risk.



Rate this market maker definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: ex-dividend, debt service coverage, required rate of return, annual return, FTSE, margin rate, 1035 exchange, Key Rate Duration, FICO score, inflation, quality assurance, option premium, 1031 exchange, current ratio, minority interest, wholly-owned subsidiary, average price per share, phantom income, VIX, EBITDA, in escrow, risk management, diluted share, deferred tax, ex-dividend date, reverse mortgage, deferred revenue, cancelled check, real GDP, per diem, command economy, stock split, stock market close, Zero Cost Collar, dividends payable, class C shares, retained earnings, balance sheet, labor relations, liquidity ratio, APR, 144a, open position, covered put, implied volatility, limit order, 401a, LIBOR, irrevocable trust


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use