Liquidity

RECENT NEWS
Mondo Visione  Aug 15  Comment 
Liquidnet, the global institutional trading network, today announced the latest innovation within the Liquidnet Virtual High Touch™ offering: the launch of Targeted Invitations for Algos in Europe. Targeted Invitations allows buy-side...
The Economic Times  Aug 10  Comment 
Those rupee sales have added liquidity into a financial system already flush with cash after a ban on higher-denomination currency in November sparked a surge in bank deposits.
The Economic Times  Aug 10  Comment 
I think you could see another 25-50 basis point cut in the next nine months or so.
Mondo Visione  Aug 8  Comment 
The SEC Division of Economic and Risk Analysis (DERA) today published a report describing trends in primary securities issuance and secondary market liquidity, and assessing how those trends relate to post-crisis regulatory reforms. The report...
SeekingAlpha  Aug 2  Comment 
Reuters  Aug 2  Comment 
The Reserve Bank of India will continue to drain surplus liquidity from the banking system gradually without destabilising the market, Deputy Governor Viral Acharya said after the central bank's monetary policy meeting on Wednesday.
The Hindu Business Line  Aug 2  Comment 
Front-loading of budgetary spending by the government has exacerbated an already persisting surplus liquidity in the system. According to the Reserve Bank, there was also some moderation in the pa...




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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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