Illiquid Market Definition

An illiquid market is one where assets cannot be easily bought or sold without significantly affecting the price.

What is an Illiquid Market?

Illiquid markets typically have wider spreads and higher price volatility due to lower trading volume.

Trading in illiquid markets can carry higher execution risk, including slippage.

A thinly traded small-cap stock with few daily transactions is an example of an illiquid market.

Implied volatility is the market's expectation of future price fluctuations, derived from options pricing.

An index is a statistical measure representing the performance of a group of assets, such as stocks, used to track a market or sector.

An index fund is a fund designed to track the performance of a specific market index.