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. 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. Discount Broker

    A stockbroker who carries out buy and sell orders at a reduced ...
  6. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
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