Market Makers Explained

What do market makers actually do?

Market makers generally provide quotes on both sides of a market, helping buyers and sellers transact. Their strategies and obligations vary by venue and instrument.

They may manage inventory risk, adjust quotes, and respond to changing market conditions.

A common misconception is that market makers always know where price is going or deliberately hunt every retail stop.

The reality is more nuanced. Markets contain many participants with different objectives, and displayed order-book activity doesn't reveal the full intentions of those participants.

Understanding market mechanics is more useful than blaming every losing trade on market manipulation.

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