In this thread, the top answer discusses: "buy on bid, sell on ask" as "market making" strategies.

My question is:

1. In layman terms, what does "buy on bid, sell on ask" mean?
2. Why are these techniques called "market making"?

closed as off-topic by kurast, olaker♦Nov 1 '13 at 14:52

This question appears to be off-topic. The users who voted to close gave this specific reason:

• "Basic financial questions are off-topic as they are assumed to be common knowledge for those studying or working in the field of quantitative finance." – kurast, olaker
If this question can be reworded to fit the rules in the help center, please edit the question.

• FYI, that answer has things reversed. Market makers buy at the bid and sell at the ask because they are passive traders. Buying at the ask, or lifting the offer, means you are aggressively taking liquidity and crossing the spread. – Louis Marascio Oct 25 '13 at 11:59
• You're going to attract a lot of negative attention by asking for "laymen's terms" definitions of simple concepts. This site is meant for professionals who practice quantitative finance on a daily basis. – Joshua Ulrich Oct 25 '13 at 20:09
• @LouisMarascio Wow...I didn't even notice that was reversed. That's insane. Would be nice if everyone did a little googling before asking a question. – Shane Oct 26 '13 at 1:47
• @Shane I've already suspended this user. In the span of one day he's asked how stock prices are determined, what the limit-order book is, and how HFT adds to liquidity. – chrisaycock Oct 26 '13 at 2:14