The idea that market makers are always against you is a common belief among retail traders. Market makers, as the entities that provide liquidity by buying and selling financial instruments, are often seen as the “enemy” because they profit from spreads, stop losses, and triggering retail traders’ mistakes. While market makers are profit-driven and often take the opposite side of retail trades, the belief that they are always against you is an oversimplification. Market makers are part of a broader ecosystem, and understanding their role in the market is crucial for creating a balanced perspective.

Why traders believe market makers are against them

1. Spreads and commissions
Market makers earn money through the bid-ask spread — essentially profiting from the difference between the buy and sell price. This can feel like an automatic disadvantage for retail traders, as they must first overcome the spread to break even.

2. Stop hunting myths
Many retail traders believe that market makers specifically target their stop-loss orders to trigger price moves. This belief is fueled by instances of sudden price movements that hit known support or resistance levels, which can appear to be a deliberate attempt to “take out” retail traders.

3. Asymmetry in power
Retail traders are often much smaller in scale than market makers, which can create the feeling of being “pushed around” by institutions that have the resources to move prices at will.

4. Price manipulation narratives
Some traders believe that large institutional players and market makers work together to manipulate prices, triggering false breakouts or reversals in order to create opportunities for institutional profit.

Why market makers are not always “against” you

1. They provide liquidity
Market makers facilitate trades by ensuring there’s always a buyer or seller available. Without them, the market would lack liquidity, making it more difficult to execute trades efficiently and at fair prices.

2. They don’t “know” your trade
Market makers are focused on providing liquidity and hedging their risk. They don’t have access to the specific trades retail traders make or deliberately target your stop-losses. They typically have no incentive to chase your individual trade.

3. They trade on a risk-neutral basis
Market makers do not typically hold positions for the long term; they hedge their exposure by taking the opposite side of trades and aiming to stay “market neutral.” Their goal is to make profits from spreads and manage their risk, not from taking retail traders’ money.

4. Market makers can suffer losses too
Market makers are not immune to market conditions. While they make money from providing liquidity and spreads, they are still exposed to market fluctuations and can experience losses if they don’t effectively manage their risk.

5. Retail traders can take advantage of market makers’ behaviour
Smart retail traders can learn to identify key areas where market makers may be positioning themselves, such as liquidity zones, order blocks, and support/resistance levels. By understanding the dynamics of market-making, retail traders can align themselves with price movements rather than fight against them.

What to understand about market makers

• Role in the market: Market makers ensure there is always liquidity for both buyers and sellers. Without them, the market would be much less efficient.
• Profit from spreads, not retail traders: Market makers make their money from the bid-ask spread and executing a high volume of trades, not from targeting retail traders directly.
• They’re not your adversary: While they benefit from liquidity provision and may trigger price moves to capture profits, market makers are simply part of the ecosystem that facilitates the entire market’s function.

How retail traders can work with market makers

• Avoid obvious stop zones: Market makers often target obvious stop-loss areas, such as just below recent lows or highs. Place stops with consideration of liquidity zones.
• Identify key support and resistance levels: Use areas of high volume, recent reversals, and price consolidation to anticipate where market makers may be active.
• Understand market sentiment: Learn how market makers respond to macroeconomic events, news, and market sentiment. This can help you anticipate price moves.
• Use risk management: Even if you think market makers might push price against you, a solid risk management strategy (e.g. tight stop losses, position sizing) will help protect your trades.

Conclusion: Are market makers always against you?

No — market makers are not always against you. They play a crucial role in ensuring liquidity and efficient market functioning. While they profit from the bid-ask spread and hedge their exposure, they don’t specifically target retail traders. Instead of viewing them as an adversary, it’s more productive to understand how they operate and how you can align your strategy with market dynamics.

Learn how to trade effectively by understanding market mechanics and improving your risk management in our expert-led Trading Courses, designed to help you navigate the complexities of liquidity and market makers.