Day Trading Market Makers

Market makers are the bigger participants that 'make a market' day trading in various defined stocks or other securities. Your day trading broker may actually be a market maker. Market makers, like big banks and financial institutions, make money day trading both for clients, and for their own accounts (i.e. day trading on a very large scale).

Market makers generally have a fixed contractual obligation to provide liquidity for the stocks they make a market in - this is essential to enable the market to run smoothly, and means that a market maker HAS TO GIVE YOU A PRICE. You may not, of course, like the price he gives you! Market makers can deal with incredibly large buy and sell orders, although they will always try to introduce these giant orders into the market in a 'drip feed' fashion so as not to 'tip their hand' to the other players in the market.

The big, rich and well known firms of Bear Stearns and JP Morgan are excellent examples of day trading market makers. You would be wise to avoid day trading in the opposite direction to the market maker in their own contractual stocks, because when they trade, they trade!