Have you ever wondered how you can buy or sell currency pairs at any given time? Despite being a global event, the probability of finding a trader willing to make a trade in currency pairs of our choice at any given point in time is very small. And yet every single trade gets completed within seconds. This happens because of the functioning of market makers.
A market maker jobs involve a mediator whose job is to create a virtual market for the trader. The moment we place an order to buy/sell, the market maker carries out the trade, irrespective of its own loss or profit. In the list of market makers comprise investment banks, central banks, commercial banks and big brokerage firms. These institutions are always standing ready with a fixed bid and ask price. A market-maker offers services in both rising and falling market scenarios.
Thus, in short, we can say that makers of market make money by taking advantage of the difference between the bid and offer prices. This bid/offer spread depends on the liquidity of the market and the transaction size.
There are two common misconceptions about what Market Makers do. Common Misconception One: “I need you to help me find lots of market makers to help promote my company’s stock. I want there to be lots of trading activity in my stock so I need lots of Market Makers.” Truth: Market Makers job do not promote your stock or create trading activity. They are passive players, merely matching buy and sell orders from investors to maintain an orderly market.
Common Misconception Two: “I need you to help me find market makers to help my company raise money.” Truth: Market Makers do not raise money for you. As you know by reading information on any website, you cannot legally raise money by selling your stock in the trading market. Only people who already own your stock can sell through a Market Maker. It is true that a broker dealer can help raise money for you. However, they do so only in their capacity as Placement Agents or Underwriters, not Market Makers. Many brokers that raise money for companies are not Market Makers.
With the advent of market maker jobs, players such as large multinational companies and registered money brokers have started locking horns with the likes of big investment banks in the field of trading. Some of the most famous market makers are Capital Markets and Gain Capital.
“Author’s say’s” A market maker jobs involve a mediator whose job is to create a virtual market for the trader.