MAKER VS. TAKER
Every trade on a continuous order book involves two orders: one that provides liquidity to the order book, and another that removes liquidity from the order book. For a buy or sell order to provide liquidity, it must first be posted to the order book. This means that it doesn’t fill immediately since it doesn’t match with and trade against an existing order; instead it must rest on the order book until another order matches and trades against it. This kind of buy or sell order adds liquidity to the marketplace and is called liquidity-making – the customer who places it is referred to as a maker. On the other hand, a buy or sell order that immediately matches with and trades against an existing order on an order book removes liquidity from the marketplace and is called liquidity-taking – the customer who places it is referred to as a taker. Because liquidity-making orders do not fill immediately and, therefore, bear more market risk, they receive greater incentives.