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
- 5 Things Las Vegas Sands Management Wants You to Know
- Why This Popular Insurer Lost More Than a Quarter of Its Value in August
- 5 Things Aflac's Management Wants You to Know
- Apple Inc. Could Have Trouble Selling a $200 Apple TV
- Why AeroVironment Stock Dropped 11% This Morning
- Why I Bought More LinkedIn Stock