Investment—Trading Jargon 101
The below information was shared by @FabiusMercurius on her twitter thread: Trading Jargon 101 1. Market maker vs Market taker Markets are made up of makers & takers. Makers: "producers" of buy/sell orders (they create quotes based on the max price at which they'd buy & min at which they'd sell) Takers: "consumers" (they buy or sell instantly at the maker's price quote) 2. Passive vs Aggressive Order (Limit vs Market Order) Passive/limit order: a trader sets a new price, different from the going rate (e.g. buy $TSLA at $800, while current price is $616) Aggressive/market order: a taker executes a buy/sell immediately @ whatever the going rate 3. Liquidity People often describe market makers as " liquidity providers ." Liquidity is the degree to which one can quickly buy/sell a security. In markets with lots of quotes flying around, orders get matched & filled fast (high liquidity). Makers add liquidity ; takers remove . 4. Bid-...