The procedure for transacting in the commodity futures and capital markets is slightly different from the procedure for transacting in the real world commodities markets. If in a traditional market or supermarket, the buyer usually doesn’t have the power to set the price (bargaining power), then in commodity futures and capital markets. Buyers and sellers can enter their desired buy and sell prices.
This is the role of market makers and market makers in setting prices.
Buying and selling prices are recorded by the machine. The transaction is agreed if the sale price is equal to the purchase price. If the selling price is not equal to the purchase price The seller or buyer must wait until the other party offers the same price level.
to discuss market makers and market makers You must understand the command options. (transaction process) in the world of trading first There are two ways to enter this pricing option.
The first is to click on the market order. In this way, the assets you own whether forex, stocks or cryptocurrencies. will be sold or bought at the current market price The advantage is that buying and selling transactions happen quickly. On the other hand, the downside is that you will sell the asset at a lower price than expected.
For example, Asep has 100 USD in forex savings in the past. When he bought it, Asep spent Rp. 1,400,000 and hoped that USD/IDR would increase so that the savings value could be Rp. 1,500,000. Because he Need money, Asep sells USD by pressing the market order menu. a few minutes later The saving asset USD was sold for 14,370 per unit or a total of 1,437,000.
The second way is to click on a limit order. In this way, you can sell the asset you own at the price level or number of lots you want. The advantage is that your profit will be maximized. The downside, on the other hand, is that you have to wait until a buyer wants to buy your asset at that price or amount.
What is Market Maker?
A market maker is a person who enters sell orders and buys assets with a limit order menu. it’s called that (Market maker means market maker) because for the asset exchange, the person who clicks the limit order plays the role of supply. stock liquidity at.
For example, Ujang is a crypto trader. He bought 100 units of Tether (USDT) when the price was still Rp 14,200 each. Because he hoped USDT would reach 14,500 units, he hit the menu limit orders at that price. Due to Ujang’s actions, cryptocurrency exchanges have USDT “stocks” ready to sell for 14,500, so Ujang is called a market maker.
What is Market Taker?
A market taker is a person who sells his asset at the price available in the market at the moment by selecting a market order option. This market price can be seen in the order book menu on your trading platform.
An example is the Asep case above. Although Asep expects the dollar exchange rate to reach Rp 15,000, because he wants the money So he sold it at the current market price of Rp 14,370, although he made a profit. But the profit margin is still much lower than what Asep needs.
Asep is called a market taker because by selling USD at market price, he accepts USD “shares” on forex exchanges so that USD shares are not traded by other traders who may bid USD at a higher price.
Market Maker and Market Maker Fees
You need to know that selling or buying an asset with a menu of limit orders or market orders will incur a fee. Usually, The fee charged by the market receiver is more than the market maker’s fee..
That’s because with a market order, you will receive “shares” that may be sold by the relevant exchange to other traders. The cost of the market taker is more expensive because you don’t have to wait long for the deal to happen. This is very useful for profit and loss processes. because it may be that if it takes longer The price of these assets will also decrease.
Market Maker and Market Receiver fees are different on each platform. For example, at Indodax you can become a Market Maker with 0% fee and Market Receiver with 0.3% fee plus 0.21% processing fee at Zipmex. The pair will be charged 0.2%.
Make sure that when choosing a trading platform You have to pay attention to this cost factor. Don’t let big expenses cost you money.
Market Maker vs Market Taker: Which is Best for You?
Traders have to choose the open order strategy they execute. Either a market maker or a market trader. This is because the cost and transaction volume required to execute the strategy will certainly affect the amount of profit and loss the trader will receive.
You can become a market maker and market maker according to your preferences. Generally, limit options or become market maker are used when you want to profit at a certain price or volume level.
On the other hand, the market taker or market order menu is used for stop losses to prevent deeper losses. Money is required as in the case of Asep above, or when the value of your asset reaches profitability faster than you expected.
The differences between Market Makers and Market Makers are:
- Market Makers choose limit orders when selling or buying assets. This will provide liquidity in the exchange.
- Market makers choose market orders when selling or buying assets using exchange liquidity.
- The advantages of market makers are lower transaction costs and maximum profits because they can be set. Total quantity and the desired price The downside is that traders have to wait a long time for order execution to occur.
- The advantage of the market receiver is that the transaction process is fast and can be conditionally used to make profit or cut losses. The downside is the higher transaction fees and the possibility of not maximizing profits.