The market taker definition is best explained side by side with the market maker concept. Thus, in this guide, you will find out which roles these two types of traders play in the crypto space and learn about the characteristics and fees associated with them.
Who Is A Taker?
A market maker is a trader who introduces an operation order with a value different from the one available on the market. Such orders cannot be completed immediately, which means that they carry liquidity by remaining in the order book.
In contrast, if an individual places an order that trades immediately, they are considered to be a market taker, as they are “taking” volume off the order book and liquidity off the market. For instance, market orders are always attributed to takers, and so are limit immediate or cancel (IOC) and limit fill or kill (FOK) orders.
What You Need To Know About Takers
Many crypto exchanges generate a significant share of their revenue from charging trading fees. The amount that needs to be paid often depends on the exchange platform, transaction size, and whether the trader is a maker or taker.
Exchanges that use a maker-taker model typically charge makers lower fees, as they provide liquidity to the platform, boosting its attractiveness as a trading venue. Some platforms even fully relieve market makers from fees to enhance liquidity.
On the other hand, traders who perform the taker role and make use of liquidity to easily buy and sell crypto assets, usually face higher fees.
Keep in mind that not every exchange relies on a maker-taker model, yet many popular platforms such as GDAX and Kraken do.
Overall, there is no competition between the roles of a taker and maker, as they are both essential for the functioning of a crypto trading market.
