What is a Market Taker?
A market taker is an individual or entity that buys and sells assets in order to take advantage of price differences in the same asset across different exchanges. In the cryptocurrency world, this usually means taking advantage of arbitrage opportunities between different crypto exchanges. Market makers are often active traders who use trading algorithms to continually monitor prices on multiple exchanges at once, looking for profitable trades. They may also employ hedging techniques such as short selling and derivatives contracts to help protect against losses if prices move against them.
The term ‘market taker’ can also refer to someone who engages in high-frequency trading (HFT). This type of trader uses sophisticated software programs with algorithms designed to identify profit opportunities from very small changes in asset prices over extremely short timeframes, sometimes within seconds or even milliseconds. HFTs often trade large volumes of assets and act as liquidity providers by making it easier for buyers and sellers to transact quickly without having to wait for another party willing to trade at their desired price levels.
Market takers are contrasted with market makers, who add liquidity by providing buy and sell orders on an exchange rather than taking existing orders off the books like market takers do. Market makers typically charge a fee for their services which helps make markets more efficient by increasing depth and reducing spreads between bid/ask prices – both factors that benefit traders seeking optimal entry/exit points when buying or selling digital currencies
