| Market Maker Spread |
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The
difference between the price at which a Market Maker is willing to
buy a security and the price at which the firm is willing to sell
it (the difference between the bid and ask for a given security).
Since each market maker can either buy or sell a stock at any given
time, the spread represents the market maker's profit on each trade.
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Market
makers are limited to the size of spread they offer. The bid/ask spread
has a maximum size, this is to prevent cheating and manipulation of
stock prices. |
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