Liquid Market

Filed Under »
Dictionary Says

Definition of 'Liquid Market'

A market with many bid and ask offers, low spreads and low volatility. In a liquid market, it is easy to execute a trade quickly and at a desirable price because there are numerous buyers and sellers. In a liquid market, changes in supply and demand have a relatively small impact on price. The opposite of a liquid market is called a "thin market" or an "illiquid market."

Investopedia Says

Investopedia explains 'Liquid Market'

The market for the stock of a Fortune 500 company would be considered a liquid market, but the market for a family-owned restaurant would not. The largest and most liquid market in the world is the forex market, where foreign currencies are traded. The U.S. dollar is the most liquid currency in this market. Nearly every central bank and institutional investor in the world holds U.S. dollars, and some foreign countries use it as an official or unofficial alternative to their local currencies or as an exchange-rate peg. The markets for the euro, yen, pound, franc and Canadian dollar are also highly liquid.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Liquidity

    1. The degree to ...
  2. Spread

    1. The ...
  3. Thin Market

    A market with a ...
  4. Volatility

    1. A statistical ...
  5. Volume

    The number of ...
  6. Price Continuity

    A characteristic ...
  7. Imperfect Market

    A market where ...
  8. Slow Market

    1. A market that ...
  9. Market On Close - MOC

    A non-limit ...
  10. Forex - FX

    The market in ...

Articles Of Interest

  1. Understanding Financial Liquidity

    Understanding how this measure works in the market can help keep your finances afloat.
  2. What number of shares determines adequate liquidity for a stock?

  3. Is scalping a viable forex trading strategy?

  4. A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  5. ETF Liquidity: Why It Matters

    Lower levels of liquidity in exchange-traded funds make it harder to trade them profitably.
  6. Understanding Liquidity Risk

    Make sure that your trades are safe by learning how to measure the liquidity risk.
  7. The Forex Three-Session System

    Market hours for Tokyo, London and New York determine volatility peaks. Find out why.
  8. A Forex Trader's View Of The Aussie/Gold Relationship

    We look at why this relationship exists and how you can use it to produce solid gold returns.
  9. America's Loss Is The Currency Market's Gain

    The Smithsonian Agreement hurt the U.S. in the short-term, but was necessary in furthering real market-driven exchange rates.
  10. Fundamental Speed: The "Duck-And-Jab" Approach To Forex

    By using economic releases in a timely way, buyers can beat the "big players" without endless chart analysis.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center