Dealers place bid and ask prices on a continuous basis and trades are linked and executed electronically. Orders placed on the NYSE may take several seconds or more to be processed through the specialist system. Generally, the more liquid the stock the smaller the spread. Penny stocks and options have notoriously large spreads. If a security has a spread of several percentage points, an investor or trader attempting to make money would have to get several percentage points of price movement just to break even on a trade using market orders.
Day traders tend to trade in very liquid stocks that have very small spreads.
Just as the internet has offered individual investors the opportunity to transact in the securities market with little or no brokerage costs, new systems and software are providing direct access to the markets giving individuals the opportunity to, in effect, become market makers. Traders can buy and sell securities with the same speed as professional market makers and securities dealers. A difference between a professional market maker and a day trader might be that a day trader will generally open a trade and immediately try to reverse the trade while a market maker will not immediately try to reverse each trade. Over the course of the day the market maker will try to balance his book, but he will generally have more capital available and is more concerned with the average of many trades than concentrating on each individual trade during the day. A distinction to be made with professional market makers and day traders is when they cross the line from market making activities to taking positions in order to speculate on the direction of securities.