DEFINITION of 'Price Continuity'

A characteristic of a liquid market where the price movements between transactions are relatively small. Each trade results in minimal price changes, as if the proceeding price continued through to the next transaction.

BREAKING DOWN 'Price Continuity'

Price continuity represents the depth in a market, indicating a large number of buyers and sellers for a security. Each buyer and seller will have a bid and an ask, which represent the prices at which traders will buy or sell a stock. The bid-ask spread usually tightens with a large number of buyers and sellers, so the range in which a security will trade narrows. A narrow trading range will produce a high degree of price continuity.

  1. Thin Market

    A market with a low number of buyers and sellers. Since few transactions ...
  2. Bid and Asked

    ‘Bid and Ask’ is a two-way price quotation that indicates the ...
  3. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  4. Bid-Ask Spread

    The amount by which the ask price exceeds the bid. This is essentially ...
  5. Third-Party Transaction

    A third-party transaction is a business deal with a buyer, a ...
  6. Average Daily Trading Volume - ...

    The average amount of individual securities traded in a day or ...
Related Articles
  1. Insights

    Tips For Face-to-Face Buying And Selling

    Be aware of these dangers when buying or selling goods in person.
  2. Investing

    Understanding Liquidity Risk

    Make sure that your trades are safe by learning how to measure the liquidity risk.
  3. Investing

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  4. Insights

    Stock Quotes Explained

    Curious about how stock quotes are compiled and what a trader should know about how? Read on.
  5. Small Business

    Letter of Credit

    A letter of credit is a document from a bank promising to pay the holder a certain amount if the holder fulfills certain obligations. Sellers in commercial transactions often require buyers to ...
  6. Investing

    Playing hardball when selling your home

    Using these strategies will help you get more cash when selling your house.
  7. Investing

    Housing deals that fall through

    Find why buyers back out, and what you can do if you're left holding the bag.
  8. Investing

    7 Tips for Writing a Homebuyer’s Letter to a Seller

    To win a real estate bidding war, use these seven tips for writing a homebuyer’s letter to a seller that’s engaging and personal.
  9. Small Business

    Finding The Best Buyer For Your Small Business

    Learn more about the process business owners go through to seal a merger or acquisition deal.
  1. What does the variance between the bid and ask price of a stock mean?

    Find out how stocks are traded in the market, why the bid and ask prices are different and why the bid-ask spread is smallest ... Read Answer >>
  2. What number of shares determines adequate liquidity for a stock?

    Learn how the liquidity of a company's shares is generally affected by bid-ask spread and trading volume of shares bought ... Read Answer >>
  3. What are the determinants of a stock's bid-ask spread?

    Stock exchanges are set up to assist brokers and other specialists in coordinating bid and ask prices. The bid price is the ... Read Answer >>
  4. What types of stocks have a small difference between bid and ask prices?

    Learn more about bid-ask spreads and why stocks with high levels of liquidity and low levels of volatility usually have narrow ... Read Answer >>
  5. What's the difference between bid-ask spread and bid-ask bounce?

    Understand the difference between the bid-ask spread that determines the buy or sell price for a stock and a bid-ask bounce, ... Read Answer >>
  6. How is it possible to trade on a stock you don't own, as is done in short selling?

    Understand how the process of short selling allows a person to sell a stock without technically owning it. Read Answer >>
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  3. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  4. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  5. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  6. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
Trading Center