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Makers and takers

Lesson 2 of 9, beginner, about 2 minutes.

Every trade has a buyer and a seller, so "more buyers than sellers" can't literally be true. What can differ is who was in a hurry.

Makers wait, takers cross

A limit order that rests on the book adds liquidity: that's a maker. A market order, or a limit order that crosses the spread and fills immediately, removes it: that's a taker. Exchanges usually charge takers more, or pay makers a rebate, because makers are the supply of liquidity.

Who pushed

When a trade prints at the ask, a buyer was the taker; at the bid, a seller was. "Taker buy volume" and "taker sell volume" count which side was doing the crossing. It's the closest thing there is to measuring impatience, and it's the foundation of the volume delta lesson that follows.

A warning about the labels

A big buy on the tape might be a market maker reducing a position, or one leg of a much larger hedged trade. Taker flow tells you who crossed the spread on this venue, at this moment, and not what they were ultimately trying to do.

Try it on live data

Check yourself

Answer all 3 to finish the lesson.

1. A resting limit order that adds liquidity is placed by…
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A maker. Makers post orders that wait on the book.

2. A trade prints at the ask. Who was the taker?
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The buyer. The buyer crossed the spread to reach the seller's resting ask.

3. What can't taker volume tell you?
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What the trader was ultimately trying to do. A taker print shows urgency on one venue, not the wider plan behind it.