Liquidity

RECENT NEWS
The Economic Times  6 hrs ago  Comment 
Global markets will be dancing to a looser monetary beat in the coming months in real terms.
The Economic Times  Mar 22  Comment 
The blue-chip CSI300 index fell 0.5 per cent, to 3,450.05 points, while the Shanghai Composite Index lost 0.5 per cent to 3,245.22 points.
Mondo Visione  Mar 21  Comment 
The European Securities and Markets Authority (ESMA) latest research piece on market liquidity published in its recent report on trends, risks and vulnerabilities (TRV) finds improved liquidity in European sovereign bonds markets. Episodes...
The Economic Times  Mar 21  Comment 
The blue-chip CSI300 index rose 0.5 percent, to 3,466.35 points, while the Shanghai Composite Index added 0.3 percent to 3,261.61 points.
The Economic Times  Mar 17  Comment 
Many stocks are at record highs, mirroring the Nifty levels, yet analysts are betting on more action in these stocks, thanks to the unabated liquidity flows.
Mondo Visione  Mar 8  Comment 
Nasdaq Private Market (“NPM”) today announced the launch of Alternatives, a new business line designed to address the challenge of liquidity in alternative investment funds, with a vision to broaden access to these investments in an innovative...
The Economic Times  Mar 8  Comment 
The CSI300 index fell 0.1 per cent, to 3,449.45 points at the close, while the Shanghai Composite Index was barely changed at 3,241.18.
SeekingAlpha  Mar 8  Comment 
Mondo Visione  Mar 7  Comment 
A report published today by the Board of the International Organization of Securities Commissions (IOSCO) has found no substantial evidence showing that liquidity in the secondary corporate bond markets between 2004 and 2015 has deteriorated...




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Liquidity

Liquidity is defined as the ability to trade large size quickly at a low cost. It is one of the most important characteristics of a market. A liquid market allows traders to implement their strategies cheaply, normally with a limited bid/ask spread. A liquid market is characterized by high volume. It is generally less volatile than an illiquid market.

Usually, you can refer to three dimensions of liquidity - time, size and cost:

• “Immediacy” refers to how quickly you can execute a trade of a given size at a given cost.

• Width refers to the cost of executing a trade of a given size, including commissions.

• Depth refers to the size of a trade that can be executed at a given cost. Width and depth are very strictly related.

A liquid market is a market where you can trade large size quickly at low cost. Liquidity refers to how quickly you can convert your assets into cash. [1] Liquidation is the conversion of assets into cash by an Investor getting rid of a position in a particular type of security. [2]

For example, a portfolio manager might decide to liquidate a position in a stock by selling all the shares of that stock held in the portfolio. [3]

1610s, from liquidus. [1] Liquid Financial sense of "capable of being converted to cash" is first recorded 1818. [2]

References

  1. Stock Investing for Dummies‬ By Paul Mladjenovic pg22 ISBN-10: 0470401141
  2. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott Accounting Professor ISBN-10: 0618176519 pg 212
  3. Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. ISBN-10: 0618176519 pg212

4. http://www.bestcashloans.org.uk/

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