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I've read about the fee structure for makers/takers here but I am trying to understand how the price moves.

Since the makers put orders in the orderbook and takers essentially take those out, is it correct to say that without takers the price would never move?

Or to phrase it in another way, could the price move any other way if there were no takers?

...or to generalize it: Takers move the price

The above statement is an oversimplification since the taker's order would have to deplete the quantity thats in the orderbook for the price to move but i'm just trying to understand in general terms.

Nik
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2 Answers2

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I agree with your conclusion except that I'd add the word could to Takers move the price.

The most succinct explanation for this came from @Pixel in your link:

Maker orders are not executed immediately; buyers and sellers must reach your ask/buy before the order is executed. Taker orders are executed immediately, and take liquidity away from the market.

Maker orders go on the order book, waiting for someone to cross the spread, resulting in a trade. Taker orders result in fills and if they are large enough in toto and they take out the available size of either side of NBBO, price moves.

Bob Baerker
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It depends what you mean by "the price".

First, note that it's possible to have a market with makers and no takers (e.g., some obscure options), but it's not possible to have takers and no makers.

If the price means the price of actual trades, then not only are takers required in order to move the price, they are required for the price to exist at all (with only makers, there are no trades).

If you count bids and asks as prices, then takers are not required in order to move the price. Makers can and do change or cancel their orders at any time based on their evaluation of the market. Thus, the order book evolves with time, whether or not there are takers. This is clearly seen in the aforementioned obscure options, which are repriced continually all day even if they never trade. It is a fallacy to think that, say, the ask price can rise only via buyers taking it out.

nanoman
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