Heads-Up: Upswing Resilient Investor Guide - Stock Liquidity
Let’s dive in liquidity of stocks [1,52-54] and related BI indicators such as the Average Daily Traded Volume (ADTV) and Share Turnover (SHT), Depth of Market (DOM), Bid-Ask Spread (BAS) and optional Variance Ratio (VR). Liquidity refers to the efficiency or ease with which an asset can be converted into ready cash without affecting its market price. The easier it is to buy and sell an asset, the more liquid it is. Liquidity applies to any financial market, from stocks to precious metals, but some are more liquid than others. The most liquid asset of all is cash itself. Tangible assets, such as real estate, fine art, and collectibles, are all relatively illiquid. Most securities, such as stocks, ETFs, mutual funds, bonds and commodities are liquid assets. The most liquid market in the world is forex [53]. Generally, stocks of companies with the largest MC are quite liquid (Green). If a stock cannot be sold easily without a considerable loss, it i...