Frictionless Market


DEFINITION of 'Frictionless Market'

A theoretical trading environment where all costs and restraints associated with transactions are non-existent.

BREAKING DOWN 'Frictionless Market'

The advent of discount brokers and their low commissions has brought the market closer to a frictionless state. But, in reality there are no truly frictionless markets since trading is always associated with certain costs or restraints, such as commissions and tax implications.

  1. Commission

    A service charge assessed by a broker or investment advisor in ...
  2. Friction Cost

    The direct and indirect costs associated with the execution of ...
  3. Transaction

    1. An agreement between a buyer and a seller to exchange goods, ...
  4. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  5. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
  6. Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced ...
Related Articles
  1. Options & Futures

    10 Tips For Choosing An Online Broker

    This important investment decision happens before you pick your first stock. Find out how to get it right.
  2. Options & Futures

    Brokers and Online Trading

    How do you find the right broker for your investment needs? Start by reading our broker tutorial.
  3. Investing

    Asset Manager Ethics: Placing and Managing Trades

    Five guidelines have been created to assist asset managers on the best practices for placing and managing trades in client accounts.
  4. Investing Basics

    How Goldman Sachs Transformed Utah Into the 'Wall Street of the West'

    Learn how Goldman Sachs has built a substantial presence in Salt Lake City. Read about another major financial institution also located in the area.
  5. Investing Basics

    What is Rule 48?

    Rule 48 is a tool used by market operators to expedite trading in the opening hour, during periods of extreme volatility.
  6. Investing

    The Most Expensive Brokerage Accounts For Traders

    A peek into the brokers whose brokerage charges are higher than average in the stock market world.
  7. Trading Strategies

    Why There's No Such Thing As A Stock 'Free Ride'

    If you're not familiar with freeriding and you're trading stocks, you should be. Although it sometimes happens unintentionally, it's illegal nonetheless.
  8. Options & Futures

    Top U.S-Regulated Option Brokers

    Options trading requires amassing significant capital and then facing high volatility. To protect yourself, ensure you trade only with regulated brokers. Here is a list of top U.S.-regulated ...
  9. Trading Systems & Software

    6 Brokers That Will Pay You To Trade With Them

    We review six leading online brokers that are offering cash bonuses for opening a new account.
  10. Trading Systems & Software

    Average Rate Of Return For Day Traders

    A look into the question of day trader earnings and factors that play a role in trading success.
  1. Does OptionsHouse have mutual funds?

    OptionsHouse has access to some mutual funds, but it depends on the fund in which the investor is looking to buy shares. ... Read Full Answer >>
  2. Are hedge funds on the buy side or the sell side?

    Hedge funds are considered to be on the “buy side” rather than the “sell side” because they actively participate in the markets ... Read Full Answer >>
  3. Some of the Best No-load Funds to Consider

    Some of the most well-known no-load funds are the DoubleLine Total Return Bond Fund (DLTNX), Vanguard Short-Term Investment-Grade ... Read Full Answer >>
  4. What action is the SEC likely to take on 12b-1 fees?

    The Securities and Exchange Commission (SEC) may take action to impose greater regulation on how 12b-1 fees are used, or ... Read Full Answer >>
  5. What is the cost of a share purchase?

    When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged ... Read Full Answer >>
  6. Under what circumstances would I require private wealth management?

    An investor who is a high-net-worth individual (HNWI) may require private wealth management services. HNWIs have unique financial ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
Trading Center