The market consists of the order-taking party and the order-taking party. Buy and sell orders created by pending orders are often not filled immediately (for example, “Bitcoin can be sold at $15,000”). Thus, this creates liquidity for the order book , meaning that when conditions are met, other users can instantly buy or sell bitcoin. We refer to users who buy or sell orders immediately as takers . In other words, the taker will fulfill the order created by the taker.

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Introduction of Maker and Taker

Regardless of the type of trading platform (forex, securities or cryptocurrencies), buyers and sellers are matched. Without these junctions, you would need to advertise on social media, advertise bitcoin-to-ethereum transactions, and expect other users to be interested.

In this article, we will discuss the concept of the order maker and the taker . Every market participant has represented at least one of these roles at one point or another, and in fact, as a trader, you likely played both at some stage. The order-taking party and the order-taking party are the source of vitality of many trading platforms, and their presence (or absence) is the key to distinguishing the strength of the trading platform.

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About liquidity

We have to talk about liquidity before we can properly drill down on the takers and takers later. If you hear someone say that some asset is liquid or illiquid , he’s actually talking about how easy it is to sell that asset.
An ounce of gold is a highly liquid asset because gold can be easily cashed out in a short period of time. To give a negative example, a 10-meter-tall statue of the CEO of Bybit riding a bull is a highly illiquid asset. While it’s a good idea to have it in the front courtyard, the reality is that not everyone is interested in this statue.

The concept of market liquidity is similar, but slightly different. A liquid market is one where you can easily buy or sell an asset at a reasonable price. Buyer users are often in great demand, and seller users are often not small in supply.
Given the intensity of activity, buyers and sellers tend to meet at the midpoint of price: the lowest sell order (or ask price ) will be in a similar amount to the highest price buy order (or bid price ). Therefore, the difference between the highest bid price and the lowest ask price is small, sometimes even negligible . The difference between the two is called the bid-ask spread .
Conversely, illiquid markets tend not to exhibit these attributes. If you want to sell an asset, it is difficult to sell at a reasonable price due to oversupply. As a result, bid-ask spreads in illiquid markets are very large.

Now that we have grasped the concept of liquidity, let’s move on to a deeper understanding of the order taker and the taker.

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Market makers and market takers

As mentioned earlier, the traders who gather on the trading platform are either the takers or the takers.

Makers

Trading platforms typically use order books to calculate the market value of an asset. The order book collects all bid and ask quotes from users. For example, you might submit a similar order to buy 800 bitcoins for $4,000 . Once the order is added to the order book, the order will be executed immediately if the price reaches $4000.
“Post only” orders require you to add an order to the order book in order to announce your intended price in advance. You are called the Maker because, in a sense, you are the creator of the market. The trading platform works like a grocery store, where the trading platform charges individuals and puts the goods on the shelves, the difference is that you need to add inventory yourself.

In general, large and institutional investors (such as those specializing in high-frequency trading) tend to take on the role of placing orders. However, small households can also act as pending orders by placing certain types of orders that will not be executed immediately.

Please note that using a limit order does not guarantee that the order will become a pending order. To ensure that the order is added to the order book before it is filled, please select “Pending Orders Only” when placing the order (currently only available for web and desktop versions).

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Takers

Using the same store analogy, if you were the owner, you would have stock on the shelves waiting for customers to buy. The customer is to eat one-sided. But instead of taking the can of soy from the store, they will consume the liquidity you provide.

Think about it: if you put a quote on the order book, it increases the liquidity of the trading platform, because the user can easily buy or sell the asset after knowing this information. On the other hand, the taker consumes this part of the liquidity. This is done through a market order , an instruction to buy or sell an asset at the current market price. When they do this, existing orders in the order book are filled immediately.
If you have ever placed a market order on Bybit or other cryptocurrency exchanges, you are a taker. Note, however, that you can also use limit orders to act as takers. That is to say: once you accept someone else’s order, you become a taker.

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Maker-taker fees

Many trading platforms make considerable profits by charging transaction fees for matching users. This means that when you create and execute an order, there is a small fee. But this amount varies by trading platform, and may vary depending on the size of the deal and your role.

Generally speaking, the placing party can add liquidity to the trading platform, so it can get a part of the rebate. For businesses, this is beneficial and not harmful, because the psychological subtext of potential traders at this point is: This platform is really good! And with high liquidity, I should trade here . After all, clients in high-liquidity platforms are more likely to close deals and thus be more attractive than low-liquidity platforms. In many cases, takers are required to pay higher fees than takers because they cannot provide the same liquidity as the takers.
As mentioned earlier, the fee structure for pending and taker orders tends to depend on the platform. You can go to Bybit’s Fee Schedule page to learn about the difference in pricing for pending and taker orders.

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Conclusion

To sum up, the taker is a trader who creates an order and waits for others to fulfill it, while the taker is a trader who fulfills the orders of others. The key difference between the two is that the market maker can provide liquidity, while the taker does not .
For trading floor platforms that use the pending order and taker model, the placing order party occupies an important position because it can increase the attractiveness of the platform as a trading venue. Generally speaking, trading platforms tend to reduce their handling fees as a reward because of the liquidity provided by the ordering party. On the other hand, takers can also use this liquidity to buy and sell assets more easily, but often at higher fees.

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