Market Maker

A market maker is an entity or individual in the financial markets responsible for providing liquidity by being willing to buy and sell securities at all times. This role involves quoting both a buy (bid) and sell (ask) price for a security, creating a market for it. By doing so, market makers ensure that there is always a price available for investors looking to trade, which is essential for maintaining market fluidity and efficiency. They earn their revenue from the spread between the bid and ask prices, essentially profiting from the difference.
Market makers must manage their inventory of securities carefully, buying when there's excess supply and selling when there's demand, to balance their books and manage risk. Their presence helps to stabilize markets, reduce spreads, and minimize price swings, making trading smoother for other participants by controlling supply and demand.