Frictionless Market

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DEFINITION of 'Frictionless Market'

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

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Commission

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

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

    A measure of what it costs an investment company to operate a ...
  4. Friction Cost

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