Liquidating Market


DEFINITION of 'Liquidating Market'

A type of securities market in which there is broad-based selling of most securities at the same time, giving the effect of low and decreasing prices on most securities while selling volumes remain high. A liquidating market is one in which the majority of investors are leaving or selling off their securities traded in that market, so that overall there is a general liquidation of securities in that market.

BREAKING DOWN 'Liquidating Market'

A liquidating market can occur for pretty much any type of security if the right conditions develop. For example, consider a housing bubble, in which real estate prices are continually bid up pretty much across the board. Once the bubble bursts, investors stop buying into real estate and begin selling their holdings.

This creates the aggregate effect of a sell-off in the real estate market as a whole, which would display relatively low prices on houses and strong selling pressure. In this case, the real estate market would be said to be a liquidating market, as most of the market's participants are chiefly interested in liquidating their assets into cash at that time.

  1. Cash

    Legal tender or coins that can be used to exchange goods, debt ...
  2. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. ...
  3. Liquidity Risk

    The risk stemming from the lack of marketability of an investment ...
  4. Housing Bubble

    A run-up in housing prices fueled by demand, speculation and ...
  5. Liquidity Cushion

    A reserve fund for a company or individual made up of highly ...
  6. Liquidate

    1. To convert assets into cash or equivalents by selling them ...
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