Clear DefinitionsMaker Order
1 min read
Pronunciation
[mey-ker awr-der]
Analogy
A maker order is like setting up a stall at a farmers' market with your produce and a price tag. You're not instantly selling to someone passing by; instead, you're adding your goods (liquidity) to the market and waiting for a customer (taker) to decide to buy from your stall at your set price.
Definition
A trading order that does not immediately fill and is instead placed on the order book, adding liquidity to the market. Maker orders wait for another trader (a 'taker') to come along and match with them.
Key Points Intro
Maker orders contribute to market depth and liquidity by being listed on an exchange's order book.
Key Points
Adds liquidity to the market by not filling immediately.
Is placed on the order book at a specific price.
Waits for a 'taker' order to match with it.
Often incurs lower fees, or even rebates, compared to taker orders.
Example
On a cryptocurrency exchange, a trader places a limit order to buy 1 BTC at $50,000, but the current lowest ask price is $50,100. Since this order cannot be filled immediately at the desired price, it is added to the order book as a bid. This is a maker order because it adds liquidity at the $50,000 price level.
Technical Deep Dive
Maker orders are typically limit orders placed at a price different from the current best bid (for a sell order) or best ask (for a buy order). When an exchange receives such an order, it cannot be matched with existing orders immediately. Instead, it's recorded in the order book, contributing to the market's depth. Exchanges often incentivize maker orders through reduced fees (maker fees) or even rebates, as these orders make the market more attractive and efficient for other traders.
Security Warning
While not a direct security risk, be aware that maker orders are not guaranteed to fill. If the market moves away from your order price, your order might remain unfilled indefinitely. Also, ensure you are on a legitimate exchange platform.
Caveat
Whether an order is classified as a 'maker' can sometimes depend on specific exchange rules and timing, especially in fast-moving markets or with certain order types like 'post-only' orders which guarantee a maker classification if filled.
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