How market makers trade?

<p id="isPasted">​A market maker is often called a “liquidity provider,” as their job is to facilitate the flow of the market.</p><p>Market makers may not be the most transparent participants in the trade life cycle—they operate behind the scenes, using high-frequency algorithms and complex arbitrage strategies. They have a clear profit motive, but the result is (mostly) liquid and smooth-running markets.</p>

<p id="isPasted">A market maker participates in the market at all times, buying securities from sellers and selling securities to buyers.</p><p>Market makers provide liquidity, which ensures investors can trade quickly and at a fair price in all conditions. In turn, this generates confidence in the markets.</p><p>Market makers compete with other market participants to execute trades. This intense competition requires continuous innovation, powerful predictive analytics and robust systems—which drive better outcomes for investors.</p><p id="isPasted">Market makers provide a ‘two-way quote’ to the market, which means they are willing to both buy and sell a security at a competitive price in all market conditions.</p><p>By taking the market risk to trade in this fashion, market makers can earn a ‘spread’ between the bid (what someone is willing to pay for a security) and the ask (what someone is willing to sell it for).&nbsp;</p>