A market maker is a participant who helps keep markets active by continuously placing both buy and sell orders.
Unlike most traders, who are primarily trying to predict whether an event will happen, market makers focus on providing liquidity.
This means they're always ready to buy from or sell to other users, making it easier for everyone to enter and exit positions.
Market makers typically earn from the difference between their buy and sell prices (known as the spread) rather than from correctly predicting market outcomes.
By providing continuous liquidity, market makers help ensure:
Faster trade execution.
Better price stability.
Smaller price spreads.
A smoother trading experience for all users.