5) Market Mechanics
Ever wonder why you can always buy or sell a stock whenever you want? That's because market makers are always ready to be on the other side of your trade. Without them, the stock market would be like a pop-up market — sometimes busy, sometimes deserted.
A market maker is an institution or market participant that continuously places buy and sell orders, ensuring there's always liquidity. They profit from the spread between the bid and ask prices they quote.
Think of a currency exchanger at the airport. They always display two prices: their buying rate for dollars (lower) and their selling rate (higher). You can exchange anytime because they're always ready. The buy-sell gap is their profit. Stock market makers work exactly the same way — always ready to buy and sell, earning from the spread.
On the Indonesia Stock Exchange (IDX), some large securities firms like Mandiri Sekuritas, BCA Sekuritas, and Indo Premier act as market makers for certain stocks. For example, ETFs traded on IDX always have designated market makers ensuring the ETF price doesn't stray too far from its NAV.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Profit / Loss CalculatorCan market makers lose money?
Yes. If the market moves very fast in one direction (e.g., a crash), a market maker that has accumulated a lot of stock can suffer significant losses. That's why they have strict risk management and usually hedge their positions.
How do I know which stocks have market makers?
For ETFs, IDX usually announces the designated market maker. For regular stocks, you can tell from liquidity and spread — LQ45 stocks almost certainly have active market makers. You can also check the IDX website under the exchange member section.
