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What is a maker?

Market makers add liquidity to markets by placing limit orders and waiting for them to be filled by other traders.

Bids (i.e., buy offers) and asks (i.e., sell offers) in an order book are limit orders set by traders who wait for the market to take their trades at the set prices. These traders are known as makers, as they make, or add, liquidity to an order book by placing orders that sit and await execution.

In contrast, other traders come in and take those bids and asks, thereby removing liquidity. These traders are known as takers.

Both makers and takers are needed for a market to work. However, makers are typically incentivized with better trading fees compared to takers.