A market maker takes the other side of your positionPositionA single entry held on the broker account, with a direction, a size, and a current floating result.Click the word to learn more. You buy, they sell. You sell, they buy. The order does not leave the broker, or at least not immediately. Behind the scenes, the broker nets exposure across all its clients and hedges externally only when it needs to.
The model has real advantages. Spreads can stay tight and fixed, even at low account sizes. Fills are usually instant. Quotes are stable. The broker controls its own book, which means the experience on the platform is predictable in a way ECN executionExecutionHow the broker turns an order into a real fill: speed, routing, and the price you actually get.Click the word to learn more cannot always be.
The structural caveat is the obvious one. At the level of a single position, the broker profits when the client loses, because their book is the mirror image of yours. Regulated market makers manage this conflict through best-execution requirements, periodic external hedging, and audited execution policies. Reputable ones publish their methods. Less reputable ones do not.
None of this makes a market maker categorically worse than ECN or STP. It makes it different, with a different set of trade-offs. What matters is knowing which model you are running on, so you can read the execution behavior with the right lens. Javlot states the execution model for each partnered broker on the strategy page where it applies.