Market Makers & Liquidity
The invisible infrastructure that keeps markets flowing
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Commodity Markets
The Invisible Market Infrastructure
Every time you buy or sell a stock, someone is on the other side instantly. Market makers are firms that continuously quote buy (bid) and sell (ask) prices, ensuring you can trade whenever you want. They're the invisible infrastructure making markets liquid.
What is Liquidity?
✅ High Liquidity
• Buy/sell instantly at fair prices
• Narrow bid-ask spreads (0.01-0.10%)
• Large order book depth
• Minimal price impact
Examples: Apple, Microsoft, SPY ETF
❌ Low Liquidity
• Hard to find counterparty
• Wide spreads (1-5%+)
• Shallow order books
• Large slippage on trades
Examples: Penny stocks, exotic options, micro-cap coins
Major Market Makers
Citadel Securities
40% of US retail stock trades, dominant in options
Virtu Financial
25% market share, operates in 235+ markets globally
Jane Street
ETF specialist, $2T+ annual trading volume
Two Sigma
Quant-driven, heavy AI/ML for pricing models
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How They Make Money
Market makers profit from the bid-ask spread—buying at bid, selling at ask. They execute millions of trades daily, earning fractions of a cent per share. High volume × small profit = billions in annual revenue.