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


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