There is one fundamental thing to understand before knowing what Maker and Taker traders are. That is, when you place a market order, that particular trade doesn’t get entered in the order books of the exchange. Because the trade gets executed partially or completely when executed at the market price. But when you pace a limit order, those trades will be recorded in the order book. Now let’s get to the topic.
Maker - All the trades that are placed using Limit Orders are known as Makers. Any order that enters the order book along with the trades related to that order can be considered a ‘maker.’ Essentially, these types of orders are adding volume to the order book which eventually make the market. Hence the name Makers.
Taker - All the trades that are placed using Market Orders are known as Takers. This is because these trades are taking volume off the exchange’s order book. In simpler terms, when you place a trade that gets executed immediately before entering into the order book is known as taker.
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