Liquidity

RECENT NEWS
Mondo Visione  6 hrs ago  Comment 
AQX° Securities, the service-oriented, multi-asset, execution services provider, today announced that it has connected to Squawker, the central forum for pan-European, negotiated equity block trading and the world’s first electronic trading...
MarketWatch  Oct 20  Comment 
Former Fed Chairman Paul Volcker and Congressman Barney Frank say those that complain about reduced liquidity are missing the bigger picture.
The Economic Times  Oct 20  Comment 
Demand high in a holiday-shortened week as markets closed. Call rates are likely to stay under pressure for the next two sessions.
Mondo Visione  Oct 16  Comment 
In light of the latest reports that highlight how markets face increased volatility and the near end of the period of unlimited liquidity and low rates, click here to download a Global Liquidity Index report compiled by CrossBorder Capital. 
Mondo Visione  Oct 15  Comment 
Neonet, the independent agency broker and execution specialist, today announced that it is providing access for clients to Aquis Exchange, the subscription-based European equities exchange. “We are very pleased to welcome Neonet as a new...
The Economic Times  Oct 14  Comment 
The CSI300 index of the largest Shanghai and Shenzhen A-share listings was flat at midday, while the Shanghai Composite Index was up 0.12 per cent at 2,368.80 points.
Bloomberg  Oct 10  Comment 
The Bank of England prepared emergency measures to pump money into the financial system last month to meet possible demand from banks in the event that Scotland voted to leave the U.K.
The Economic Times  Oct 9  Comment 
'The markets had run ahead of itself, particularly given that beyond the euphoria of the new government coming and the action that it would take on the ground, we have not seen much.'
MarketWatch  Oct 1  Comment 
A commissioner at the Securities and Exchange Commission on Wednesday said the stock market structure needs a thorough review and he stated concerns about the bond market.




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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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