A market maker, as the name indicated, is a firm or individual that is always ready to buy and sell stocks. Market maker also helps you to choose whenever you think of investment and trading. With the help of a market maker, you can opt to sell or buy market shares. Banks and brokerage companies are most commonly known, market makers. Whenever you are ready to sell shares of your firm, a market maker will buy the stock from you and may sell it afterward.
Market makers are known for providing liquidity to economic activities. Buying and selling can be done smoothly with the help of market makers. Such systems uplift the financial markets. Also, systems provided by market makers make it easier to execute trading by reducing the time required for the communication.
These broker firms are paid for the risk they take by holding the stock. The greatest risk is the fluctuating values of the stock they buy before any other customer purchase it. That is why a broker charges a margin on each stock. Market makers hold various shares/securities which enables them to adjust high volumes of market orders within competitive prices. In this way, they are able to fulfill the market demand for stocks, shares, and securities.