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Understanding Market “Liquidity”

February 10, 2016 : Permanent Link

(Harvest) Liquidity is generally defined as the ability to purchase or sell an asset without causing a dramatic change in price. However, this definition can be misleading as throughout the history of markets, we have seen securities trade with big price moves, often on big volumes. News comes out and someone is the first trade of the stock or bond at say 30% below the previous price, and then other trades ensue.

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