DEFINITION of 'Thinly Traded'

An asset that cannot easily be sold or exchanged for cash without a substantial change in price. Thinly-traded securities in the financial markets are exchanged in low volumes and often have a limited number of interested buyers and sellers, which can often lead to volatile changes in price when a transaction does occur.

Also known as illiquid.

BREAKING DOWN 'Thinly Traded'

The stock prices of small unknown publically traded companies are deemed to be thinly traded. The lack of ready buyers and sellers generally leads to large discrepancies between the asking price and the bidding price. Thinly-traded securities are usually more risky than liquid assets because a small number of market participants can have such a large impact on the price.

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