# Market maker

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Canonical: https://novigapi.com/learn/market-maker

A market maker is a trader or firm that posts resting orders on both sides of a market, earning the spread in exchange for providing liquidity.

A market maker quotes prices on both sides of a market and waits to be filled. By resting a bid on Yes and a bid on No, or a bid and an offer on a two-sided book, they let other traders buy or sell immediately. Their profit comes from the spread between those prices, and on many exchanges from rebates or credits for supplying liquidity. Their risk is inventory: if only one side fills and the price then moves, they hold a losing position.

## How it works

A market maker starts from a fair price and quotes a little below it on each side. If both quotes fill in equal size, the maker owns both outcomes at a combined cost under $1 and collects $1 at settlement whatever happens. If only one side fills, the maker carries a position until it can be offset. Good makers adjust quotes as information arrives, widen spreads when uncertain, and pull orders before big news.

## Worked example

A maker on a Novig-style game market rests a Yes bid at 48% and a No bid at 48% for 1,000 contracts each, around a fair price of 50%. The Yes ask the market sees is 1 - 0.48 = 52%.

A two-sided quote that fills on both sides

| Item | Pregame fills | In-game fills |
| --- | --- | --- |
| Cost of 1,000 Yes at 48% | $480.00 | $480.00 |
| Cost of 1,000 No at 48% | $480.00 | $480.00 |
| Guaranteed payout at settlement | $1,000.00 | $1,000.00 |
| Spread profit | $40.00 | $40.00 |
| Maker credits (25% of each taker's $14.976 fee) | $0.00 | $7.49 |
| Total | $40.00 | $47.49 |


```
taker fee per fill = 0.06 x 0.48 x 0.52 x 1,000 = $14.976; credit = 0.25 x 14.976 = $3.744 per fill
```

The risk is the case where only the Yes side fills at 48% and the price falls to 40%: the maker is down $80 on 1,000 contracts. The [Novig fee calculator](https://novigapi.com/novig-fee-calculator) gives the fee and credit for any fill.

## On Novig

Per [Novig trading fees](https://docs.novig.com/api/concepts/fees) and its Maker Credit Program (checked 12 Nov 2026), makers never pay a fee on straight contracts. They earn a credit of 25% of the taker's fee on game-market fills matched in-game and 50% on eligible futures, paid as cash within seven days. Makers can rest orders before the start, but every go-live event voids every resting order, so pregame quotes must be re-posted once the game is live. Novig also lets registered makers price parlays through request for quote, which earns no maker credit.

## When it matters

- Adverse selection: makers get filled most often when the price is about to move against them.
- Spread versus credit: a 2-point spread is the main income; credits help only on live fills.
- Data: makers need fast prices; on paid plans our REST data is at most about 10 seconds old, which suits monitoring, not quoting.

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