LiquidityIsKey

Many new crypto traders mistakenly think market makers (MMs) are the ones manipulating prices to hunt stop-losses and profit from retail traders' losses. But that view oversimplifies how markets work.

Market makers are institutions or individuals who provide liquidity by placing buy and sell limit orders on both sides of the order book. They don't exist to trap traders but to ensure there's always someone to take the other side of a trade. Their profit comes from the small spread between bid and ask prices. To operate efficiently, MMs need robust systems, strict risk control, and a lot of patience.

Unlike retail scalpers or trend traders, MMs often place Long orders slightly below market and close them just above, repeating this hundreds of times a day. Their leverage is usually very low—often 1x to 2x—unlike retail traders who commonly use 10x or more. MMs aim for consistent, low-risk profits, not massive gains.

In fact, their annual profit target is often just 8%–20%. That may seem low, but it’s enough when scaled properly. Retail traders, by contrast, often aim for 10% weekly or more, which leads to higher risk and volatility.

Retail traders can technically trade like MMs—placing limit orders, collecting small spreads, avoiding emotional decisions—but without automation, fee rebates, or sufficient capital, it's hard to sustain. Most give up because it's slow, requires patience, and doesn’t produce flashy results.

Without MMs, order books would be thin, spreads wide, and markets unstable. A case in point: when South Korea tightened regulations, many MMs left, and liquidity vanished. Retail users were the ones who suffered most.

MMs don’t profit from your loss. They profit from your trading activity. They're not villains—they’re the silent force keeping markets alive and efficient.

#MarketMakers #LiquidityIsKey #SmartTrading