Understand the difference between those who consume and those who create liquidity in the market

The Price Taker: Consuming Available Liquidity

In most cryptocurrency platforms, there are two fundamental roles that every trader can assume. Let’s start with the simplest one: the market taker. When you execute a market order – one that is filled immediately at the current price – you are consuming the liquidity offered by other traders.

Imagine a supermarket shelf: you are that customer who arrives and buys the product that is already there, leaving nothing behind. That is exactly what a taker does. By using a market order to buy 800 BTC, for example, you are instantly filling existing orders in the order book. This price taker does not wait – it takes advantage of the liquidity already provided by other participants.

Anyone who has made a quick transaction on an exchange, using the current market price, has acted as a taker. And yes, you don’t only need a market order to assume this role – a limit order can also make you a taker when it fills another trader’s order.

The Market Maker: Creating Trading Opportunities

While the taker consumes, the market maker does the opposite: it provides. When you submit a limit order that is not filled immediately, adding it to the order book, you are creating opportunities for other traders.

Returning to the previous analogy, the market maker is the one who puts products on the shelves. It announces its buying or selling intentions in advance, allowing its order to wait in the order book until the price conditions are met. If you set a buy offer at $4,000 to wait for execution, you are increasing the platform’s liquidity.

Large operators and specialized high-frequency trading institutions often assume the role of market makers. Smaller traders can also do so, as long as they use orders that are not executed immediately.

How to Ensure Your Order Is a Market Maker?

A limit order does not always guarantee that you will be a market maker. To ensure your order enters the order book before being filled, use the “Post Only” (available on the web and desktop versions). This way, you control your role in the market and can structure your strategy as desired.

In summary: those who consume liquidity immediately are the takers; those who provide it while waiting in the book are the market makers.