Hi AP, great question. If Bob and Sue have set transaction prices in their mind, they would make "limit orders", which puts their orders into the entry book, to be eventually matched with a willing party. Their order isn't guaranteed to execute -- it will stay there until someone comes along happy to make the trade. In your brokerage software, you might have conditions like "Good till cancelled" (keep the limit order outstanding forever) or "Good until end of day".

If Bob and Sue want to guarantee their order goes through immediately, they need to make a "market order", which executes at the best price available. This is like going to a currency exchange booth and saying "I'd like to buy/sell my dollars for yen, right now please." Typically a market maker will be the one who fills this order, since they are monitoring buying/selling prices and trying to offer a competitive deal (and competing with other market makers).

Market makers are just another participant, in that they list a buying/selling price, but their role requires them to have these posted. Regular investors aren't forced to list prices they are willing to buy and sell for. (If they happen to do so, great.) When making an order, your broker has to look at the prices offered by the market makers and all open orders (which may or may not exist) and get you the best price.

In short, market makers profit when people make immediate orders (an immediate buyer and seller come along, and the market maker makes the difference in price, since they have the same number of shares afterwards). I'm sure there's more finer details but that's my understanding! I found a good article here:

https://speedtrader.com/mar...