Market Taker
A trader whose order executes immediately against existing resting orders on the book, removing liquidity, as distinct from a market maker who provides it.
A market taker is a trader whose order executes immediately against an existing resting order already on the order book (see Kaavon's "Order Book" glossary definition), removing that liquidity from the book rather than adding to it. A market order, by its nature, is always a taker order, since it's designed to execute immediately against whatever best price is currently available, while a limit order (see Kaavon's "Limit Order" glossary definition) can act as either a maker or a taker, depending on whether it executes immediately against an existing order or instead rests on the book waiting to be filled by someone else.
Exchanges typically charge market takers a higher fee than market makers (see Kaavon's "Market Maker" glossary definition) under a maker-taker fee model (see Kaavon's "Maker-Taker Fee Model" glossary definition), since taker orders consume existing liquidity while maker orders contribute to it, and exchanges generally want to incentivize liquidity provision over liquidity consumption. A trader prioritizing immediate execution over the lower fee a resting order might achieve will typically accept taker status and its associated higher fee.
Examples
- A trader submitting a market order to buy immediately is always acting as a market taker, since the order executes right away against existing resting sell orders.
- Exchanges typically charge market takers a higher fee than market makers, since taker orders consume existing liquidity rather than contributing new liquidity to the book.