Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

I suggest reading up Market Maker [1].

In most scenario (assuming good demand for the stock you are buying and a functional market etc.,) a market maker, looking at their order book, buys 7 items from A. They sit on it until they are able to dispose off them to a buyer. In effect, you, as a buyer is buying a stock from market maker.

Most of the equity market is not P2P but mediated by market maker. They take the liquidity risk (i.e., holding a bad stock if demand plummets) and are rewarded for that by making money off of every transaction through bid-ask spread.

Of course I'm greatly simplifying as an equity order goes through a bunch of intermediaries but Market Maker play a central role here.

[1] https://www.investopedia.com/terms/m/marketmaker.asp



Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: