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Finance and the Good Society by Robert J. Shiller

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Chapter 6

Traders and Market Makers

The classic example of a trader is the specialist on a traditional stock exchange, who stands at a post where certain stocks are traded on the floor of the exchange, and who buys and sells from his personal inventory of these stocks in order to maintain an orderly market. But the specialist is only one of many people whose job involves trading minute by minute. In addition to market makers, there are also execution traders, who help others make transactions efficiently at good prices without disturbing the market to their own disadvantage, and proprietary traders, who trade on their own account to profit from short-run price movements, including doing risk arbitrage, that is, profiting from price discrepancies ...

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