Make a market
Make a market. In order to complete a buy or sell order, your order must be matched with a corresponding sell or buy order. When a corresponding order cannot be found, in the case of an over the counter security, a market maker will trade against you for his firm's account to complete the order. In the case of the New York Stock Exchange, specialists for each listed security fill this role.
Market makers make a profit from the bid/ask spread built into the price for each security. A market order authorizes the market maker to complete the order at the posted spread trading for his own account if necessary. A limit order offers him another price which he may decide to accept or not at his option.
Related Fool Articles
- [link link title]
Recent Mentions on Fool.com
- Social Security: 3 Ways Children Can Qualify
- Samsung's Next Giant Phone Could Abandon One of Its Predecessors' Best Features
- 5 Brands That Bleed America's Red, White, and Blue
- Hidden in Plain Sight: 5 Best Stocks in Pharmaceuticals
- 1 Reason to Bet Big on Bank of America
- 3 Biotech Stocks That Could Grow Faster than Apple