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
- Twitter, Inc. Under Dick Costolo's Leadership: Better Than You Think
- What Is Simon Cowell's Net Worth?
- Ford Motor Company: How Chickens Could Take a Bite Out of its F-Series Cash Cow
- 5 Ways to Slash Your Tax Liability in Retirement
- How You Can Ditch Comcast, Time Warner, and Big Cable for Internet Service
- Department of Justice Investigates Airlines for Collusion -- but Probably Won't Find Anything