The term liquid market identifies to a market place seen as a robust trading, narrow bid and ask spreads, and minimal trade costs. Liquid markets may additionally accept relatively massive trades and perhaps not experience substantial price swings.
A liquid market is one where you will find a number of sellers and buyers, trade costs are low, prices aren’t volatile, and also the gap between your purchase price that a seller need for a advantage and also a buyer is ready to cover is relatively tiny. Dealing at a liquid market is very crucial to get a investor since they are able to rest confident that they are going to be paid a reasonable price when selling the advantage.
Any of those environment ‘s enormous stock exchanges could be considered a liquid industry. High quantities of securities are traded electronically, sell and buy orders have been completed immediately, and trade fees are a modest proportion of their purchase value. Besides stock exchanges like the New York Stock Exchange and the NASDAQ, liquid markets would also incorporate commodities and futures trades.