In financial markets, liquidity refers to the ease of dealing in a security Ð whether shares, options, warrants or some other instrument Ð and turning them into cash.
Investment Dictionary - Liquidity
The Liquidity term refers to the easy with which an asset can be converted into cash.
Liquidity risk is financial risk due to uncertain liquidity. An institution might lose liquidity if its credit rating falls, it experiences sudden unexpected cash outflows, or some other event causes counterparties to avoid trading with or lending to the institution.
A measure of how much trading in a given stock has to happen for the price to change by 1%. The liquidity ratio is figured by adding up the daily percentage change in closing price for each trading day of the month, regardless of direction.
Liquidity and Market Size
Unlike other financial markets such as the London Stock Exchange, the forex spot market does not have a physical location or a central exchange.
a measure of the number of shares, or dollar value of shares traded daily. Mutual funds and other institutional buyers prefer high liquidity stocks so they can easily move in and out of positions.
News On ~ ...
Leverage ratio's provide investors and lenders with insight into a companies ability to meet its short term debt obligations. We will be covering three of more popular leverage ratios; the current ratio, quick ratio, and cash ratio.
The amount of trading activity, and thereby the ease with which you can get in and out of a market. Measured by volume (and open interest in the case of future markets). It is the capability to convert an asset to money quickly.
~ Measures: Net Working Capital, Current Ratio, and Quick Ratio ...
The degree of an asset's ability to be converted to cash at its fair market price ...
~ Risk of OTC Stocks
by Slav Fedorov, Demand Media
More Articles ...
Bonds issued by the Australian Government are traded by institutions in the wholesale market. This market is one of the deepest and most liquid markets in Australia.
Ability to buy or sell a security quickly and in large volume without substantially affecting its price.
~ Differences Between Stocks and Forex
By James Stanley, Forex Trading Instructor
The ability of a company to pay off its debt obligations is measured by liquidity ratios.
There can be no ironclad assurance that, at all times, a liquid market will exist for offsetting a futures contract that you have previously bought or sold.
Market liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. The term is usually shortened to liquidity.
In economics, a liquidity trap is a situation when the economy is stagnant and the interest rate is equal to, or slightly above, 0 percent.
~Port Alternative Trading System (ATS) is a fully electronic institutional marketplace for U.S. exchange-listed futures and options, designed exclusively for brokerage firms, CTAs, hedge funds and other institutional traders seeking liquidity and transparency in block trading.
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Trading Dictionary Terms and definitions for active trading, forex, futures, stocks, and options
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Can be high, with thousands of transactions being carried out on a continuous basis; or low, with only intermittent price-quote updates and transactions.
~: In terms of markets, liquidity generally refers to the ability to buy and sell assets quickly and in large volume without substantially affecting the asset’s price.
~ in banking
Main article: Market liquidity § Banking ...
~ theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market`s expectations of Future interest rates because they embody a liquidity premium. ...
The ability of a market to accept large transactions without having any major impact on the interest rates.
Top Online Forex Brokers ...
The risk stemming from the lack of marketability of an investment ...
The ~ tells you how much cash the company could come up with if it had to sell everything immediately.
The measure the ~, the current ratio is often used:
Current ratio = Current assets / Current liabilities ...
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One of the most common questions new investors ask is, "If I invest in a home or in real estate, should I pay off the mortgage early?
The ease and quickness with which assets can be converted to cash.
No profit, no liquidity
By Daniel P. Collins
A recent Bloomberg story highlighted how University of Chicago Professor Eric Budish is proposing a new electronic trading market structure for equities and derivatives.
Commodity market ~ often correlates very well with commodity market trading profits. There are three benefits to traders in high commodity market ~. The first is that it is easier to enter and exit trades. The second is that bid and ask prices are commonly closer.
Market Size and ~
Unlike other financial markets like the New York Stock Exchange, the forex spot market has neither a physical location nor a central exchange.
From now on, Europe will be facing ~ expansion with extremely low rates and this should be beneficial for equities in the region. It is hard to imagine a scenario where the additional cash leads to inflation without boosting economic activity.
There is a direct relationship between the underlying ~ of an ETF and its primary market ~, because in order to create primary market ~, the AP must trade in the underlying market-the easier an AP can access the underlying market, ...
How To Determine Options ~?
Quite often I read articles which tell us that options ~ can be measured by open interest.
Minimum Investments, Transaction Costs and ~
The minimum investment for a mortgage security varies according to the structure of the offering, but most tranches sold to individual investors require a minimum investment of $1,000.
Winning traders make prices efficient and provide most ~. Utilitarian and futile traders effectively underwrite the winning traders' efforts.
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Today's world of electronic trading and computerized trade-matching has allowed a proliferation of programmed high-frequency traders using among others highly sophisticated pattern recognition analysis to enter the trading arena under the guise of ~ providers.
~ of a market refers to the volume of the current market, the ~ is a term for how much buying and selling is taking place. The forex market is the most liquid market of all financial markets.
~ generally refers to how easily a non-cash asset can be converted to cash. As an example: US Savings Bonds are generally very liquid. A large building, requiring months to sell, is generally considered not very liquid.
Options strategies must be applied in specific market conditions to be money-makers. ~ is one of these market conditions. ~ is the ease with which a market can be traded. A plentiful number of buyers and sellers boosts the volume of trading producing a liquid market.
~ refers to an investor's ability to convert an asset into cash. The faster the conversion the more liquid the asset. Illiquidity is a risk in that an investor might not be able to convert the asset to cash when most needed.
The degree of ease to convert an asset into cash.
A measure of how much dollar volume is required to move the stock's price up or down one percentage point.
Stock chart volume also shows us the amount of ~ in a stock. ~ just simply refers to how easily it is to get in and out of a stock.
~ - Refers to the number of buyers and sellers in the market willing to trade at any given time. Generally speaking, the greater the ~ within a market, the greater the number of trades completed, which translates into higher volumes.
~ Ratios: The Current Ratio and the Quick Ratio Explained
There are two ~ ratios that are generally used to offer an insight into the ~ of the firm. These are the Current Ratio and the Quick Ratio.
Current ratio = Current assets / Current liabilities ...
~ and Manipulations in Modern Economics
By Brandon Fredrickson
February 7, 2008
Good day! For those of you who could not make it to the previous classes, the link for the logs are as follows: ...
~ / liquid Market:
The ease with which a security can be converted to cash in the marketplace without substantially affecting the assets price.
Limited by the CD's length of maturity. Investors who try to cash out early face penalties.
~ is high. Funds can usually be withdrawn within 24 hours.
Working capital compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice.
~: The ease with which a stock may be bought or sold in volume on the marketplace without causing dramatic price fluctuations. A highly liquid stock is characterized by a large volume of trading and a large pool of interested buyers and sellers.
~ is of paramount concern to traders when looking at the various times of the day, and we can simply it to mean the ability to enter a trade without measurable price shifts.
As mentioned before, outstanding shares of stocks are limited compared to the amount of a currency that might be out there floating around. A large stock purchase might be 10,000 shares, which may actually impact the stock price a little when you buy it.
~: A function of volume and activity in a market. It is the efficiency and cost effectiveness with which positions can be traded and orders executed. A more liquid market will provide more frequent price quotes at a smaller bid/ask spread.
~: ETFs are typically know for their ~, but this is not always the case.
~: For the most part, ETFs help increase ~ and trading of more illiquid assets. However, when ~ suffers an extreme drop, the bid-ask spread of ETFs can significantly widen and ETF pricing can become difficult or impossible.
~ Risk is somewhat related to opportunity risk, though in a somewhat more tangible way. This is simply the risk that you will not have money available at the time you need it.
If you haven't already, go back and read "Why is Day Trading so Difficult - Reason #1. Trading high volume, liquid markets is an absolute must if you want to succeed. Bid/Ask spreads of even one tick completely destroy trading accounts trade by trade.
~ refers to the amount of transactions in a particular counter, the larger the volume of trading, higher the ~.
Listed securities ...
~ " the degree to which it is easy to buy or sell a stock in the market
margin account " a line of credit with a bank, broker or trust company where money is borrowed for investing while using investments as collateral ...
~: Market situation in which quick purchase or sale of a security is possible without causing substantial changes in prices.
Long position: An investor's position where the number of contracts bought exceeds the number of contracts sold. He is a net holder.
~ Ratios are a measure of a company's ability to cover its short term financial obligations. Can they pay the bills, the interest on any debt, etc.?
Current ratio measures whether a company has enough assets to pay its current debts. Investors like to see a ratio above 1.
How quickly an investment can be turned into cash. Stock ownership, for example, is usually a very liquid investment, because you can redeem your shares at any time. On the other hand, a house is a very illiquid investment.
See LONG POSITION.
~ - a market that allows for easy entry and exit of a position due to the large amount of volume
Low - lowest price that occurs for a trading period
Margin - effectively borrowed money ...
~ - The ability of an insurance company to convert its assets to cash quickly.
Loss Control - The methodology used to reduce the severity or frequency of loss: prevention, reduction, segregation of exposure, transfer of risk, and avoiding loss.
~- This is the ability of a trader to convert his assets to cash in a fast way.
Margin- This is a collateral willing to be issued by a trader to a broker when he wants to borrow funds.
Margin Account- This is the account a trader must own in order to qualify for borrowing funds.
With a daily trading volume that is many times larger than the New York Stock Exchange, there are always broker and dealers willing to buy or sell currencies in the Forex market.
~: The measure of how quickly an investment can be turned into cash. A mutual fund generally is considered a very liquid investment, because shares can be redeemed at any time. In contrast, a house is a very illiquid investment.
A reserve fund for a company or person containing money market and highly liquid investments.
Living Will ...
~ - The capability of ready conversion of an asset or investment to cash.
Market Price - The current price of the security in the market.
Market Risk - The possibility that the price of the security will change over time.
~ " Mutual fund investors can readily redeem their shares at the current NAV " plus any fees and charges assessed on redemption " at any time.
But mutual funds also have features that some investors might view as disadvantages, such as: ...
~ - The ability of a market to accept large transactions.
- M - ...
~ risk: ~ risk refers to the risk of loss as a result of a lack of market ~, preventing quick or cost-effective liquidation of products, positions, or portfolios.
Market price: The current or most recent price of a security or financial instrument in the market.
~: a) The ability of an investment to be easily converted into cash with little or no loss of capital and minimum delay. An example of a highly liquid asset is a short term Treasury bill, while property is a relatively illiquid investment.
The ability to convert a security to cash quickly.
The fee charged by a mutual fund to investors to buy units (front-end load or acquisition fee) or sell units (back-end load or redemption fee).
~ premium A transaction cost estimate that uses the quotation midpoint at the time of the trade as the benchmark. The ~ premium essentially equals the difference between the actual trade price and the quote midpoint. The ~ premium is used to determine the EFFECTIVE SPREAD.
~ risk--the risk that an asset cannot be sold when desired or in sufficient quantities because opportunities are limited. Treasury securities (with the exception of inflation protected Treasury bonds) have the least ~ risk.
The possibility to buy or sell a security in volume without big price fluctuations. A liquid stock is one with a high daily volume.
~ Agreement - ~ Agreement is an agreement that allows an asset holder to convert assets into cash. An agreement allows conversion of assets into cash allows a stockholder to convert investments in stock or debentures into cash.
~: A general term used to indicate how easily transactions can be executed at or near a given price in a given issue or market. It often relates to the number of dollars required to effect a given price change.
The debt paying ability or dollar value of assets.
~: ~ is the ease in which you can turn investments into cash. A liquid market is one where there are equal numbers of buyers and sellers that both can fulfil orders.
Long: To go 'long' is to buy an instrument. To go 'short' is to sell.
~ - A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance.
Local - A floor broker who usually executes trades only for his own account.
The volume of business that can be transacted in the market. Highly liquid markets typically have narrow spreads and can accommodate large deal sizes. Illiquid markets have wide spreads, small deal sizes and are often erratic.
The ability to convert an investment into cash quickly and with little or no loss in value.
~ is the ability to easily sell or buy security or currency.
Long Position is currency purchase, when 'buy' position is opened.
Loss - reduction in deposit amount due to losses.
~ - An asset that can be easily bought or sold is considered liquid. Money market funds are perhaps the most liquid asset.
~ - the degree to which an asset or security can be bought or sold in the market without affecting the asset's price. ~ is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.
~: ~ can have two meanings. 1. The ease by which you can sell a financial instrument and turn it into cash. 2. The amount of short term liquid assets a bank holds against its liabilities to ensure that it will not be insolvent.
A security is said to be liquid when investors can easily buy and sell the security, as a result of an abundance of buyers and sellers.
By now you may be asking yourself "what about keeping some cash available?" This is very important. Just as there are very few times you should be totally disinvested, there are few times when you should have no spare cash at all.
~ - The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes. ~ is one of the most important characteristics of a good market.
~ Data Bank - A computerized profile of CBOT market activity, used by technical traders to analyze price trends and develop trading strategies. There is a specialized display of daily volume data and time distribution of prices for every commodity traded on the Chicago Board of Trade.
Over 85% of all FX transactions involve seven major currencies (AUD, CAD, CHF, Euro, GBP, JPY and USD). In a 1.5 trillion dollar daily market, traders are usually able to get in or out of currency positions in the major currencies.
Locked Limit ...
~ aggregator: An agency broker (does not commit capital) that takes a client buy or sell order and contacts a variety of market makers. This puts the market makers in competition with one another and this process helps client source ~ for their order.
A broadly traded market where buying and selling can be accomplished with small price changes and bid and offer price spreads are narrow.
A member of an exchange who trades for his own account. See Floor Trader.
~: For an investment, portfolio, or account, the ease with which assets may be converted into cash. For a market, the ability of the market to absorb fairly large volumes of sales without drastically affecting the price.
-~ — the measure of markets which describes relationship between the trading volume and the price change.
See also: What is the meaning of Market, Trading, Stock, Investor, Investment?