What Market Makers Do, And Why It Should Matter To You
Someone has to be willing to trade when you are. That willingness is a business, and it has a price.
When you sell a share, someone buys it. Often that someone is not another investor who happened to want exactly your stock at exactly that moment — it is a firm whose business is standing ready to take the other side.
The spread is the fee
A market maker quotes two prices: one at which it will buy, one at which it will sell. The gap between them is the spread, and it is the compensation for being willing to trade at any moment with someone who may know more than the firm does.
Spreads widen when a stock is thinly traded, when news is breaking, and when volatility rises — all situations in which the risk of being on the wrong side goes up. This is why a large order in a small company moves the price so much more than the same order in a heavily traded one.
Why this shows up in your account
For a retail investor the spread is usually a larger real cost than commission. In a liquid, heavily traded company the spread can be a single cent. In a small, rarely traded one it can be a meaningful percentage of the price, and you pay half of it on the way in and half on the way out.
That is the practical argument for limit orders in illiquid stocks. A market order says you will accept whatever the current quote is; a limit order says you will not.
Obligations, and their limits
Exchanges impose obligations on designated market makers to quote continuously and to help maintain orderly trading, particularly at the open and the close. These obligations are real but they are not unlimited, and they are weakest in exactly the conditions where you would most want them to hold.
The useful conclusion is not that markets are rigged. It is that liquidity is a service with a cost, that cost is embedded in the price rather than itemised on your statement, and it is highest in the securities that look cheapest to trade.