Market Maker, Market Taker

Market makers construct a market that is represented in the current list price in an effort to purchase at the current best bid or sell at the current best offer. Almost always eager to buy or sell, market makers could be tempted to withdraw during periods of high volatility.

Market takers don’t worry as much about executing at the highest bid or offer. Instead, they are looking for liquidity and speed, which are made more readily available by the continual availability of a narrow bid/ask spread produced by market makers. Market makers and market takers have a mutually beneficial relationship. To succeed, each requires the other.