📍 Core Concept

Market Makers

Understanding the role of market makers and institutional order flow.

APOLLO ENCYCLOPEDIA

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What It Is

Market makers are entities that provide liquidity by continuously quoting buy and sell prices for an asset. They profit from the bid-ask spread — buying at the bid and selling at the ask — while facilitating trading for everyone else.

Key insight: Market makers are not your adversary. They serve an essential function: without them, you couldn't execute trades efficiently. However, understanding their mechanics helps you avoid being the liquidity they exploit. They need your stop losses and market orders to fill their inventory.

In crypto, market makers range from professional firms (like Jump Trading, Wintermute) to exchange-operated programs. On decentralized exchanges, Automated Market Makers (AMMs) use liquidity pools instead of order books, creating a different but related dynamic.

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Trading With Awareness

Stop hunts are real.

Market makers see the order book. Clusters of stop losses below obvious support become targets. Price dips below support, triggers the stops (providing liquidity), then reverses. Place stops at less obvious levels or use wider stops.

Don't use market orders at extremes.

When price is spiking or crashing, the spread widens dramatically. Market makers profit most during panic. Use limit orders, especially during volatility events.

Strategy 3

Market makers leave footprints. Sudden wicks that sweep a level and reverse quickly, or absorption of large sell orders at specific prices, suggest market maker activity. Learn to read these clues on the order book and time & sales.

💡Pro Tip

Apply this concept in combination with others. No single concept tells the whole story - confluence is key.

Master Market Makers

The Academy teaches this concept through structured lessons with real chart examples.

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