Choice Market

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DEFINITION of 'Choice Market'

A market in which the spread between the bid and the ask for a given financial instrument is zero - meaning that, at any point in time, the instrument can be bought for the same price as it can be sold in the market. This type of market only occurs when there is extreme liquidity and a limited number of intermediaries.

INVESTOPEDIA EXPLAINS 'Choice Market'

This is a rare occurrence in the financial markets, as most financial instruments trade with a spread between the bid and the ask. The market that most closely resembles a choice market is forex, where some currency pairs trade with a spread of only a fraction of a percent. For example, the spread between the USD and EUR is usually only 1 basis point, or 0.01%.

RELATED TERMS
  1. Ask

    The price a seller is willing to accept for a security, also ...
  2. Spread

    1. The difference between the bid and the ask price of a security ...
  3. Liquidity

    1. The degree to which an asset or security can be bought or ...
  4. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
  5. Bid-Ask Spread

    The amount by which the ask price exceeds the bid. This is essentially ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
RELATED FAQS
  1. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ...
  2. How is spread calculated when trading in the forex market?

    First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms ...
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