Questions tagged [liquidity]

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

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2answers
4k views

Are treasury bonds more liquid than USD? [closed]

Does it make sense to say that, in a way, US Treasury bonds are more liquid than USD? I think this because the value of all the bonds in circulation is way greater than all the dollars in circulation, ...
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1answer
216 views

What is “the liquidity illusion”

I came across this visual, but it's a bit complicated, I haven't been able to make sense of it. In so many words, the way I read it is: if defaults pile up, the market is spooked, spreads increase ...
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1answer
100 views

How can I tell if an ETF is sufficiently liquid?

How can I tell if an ETF is sufficiently liquid? How much should it have in assets? How much should the minimum average daily volume be?
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Daily spread measure for products in crypto exchanges?

I'm now trying to trade in crypto, and I want to get a measure of the liquidity of products listed in exchange. Trading volume is a good measure, and easy to obtain. Spread is also a good measure, ...
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2answers
135 views

Why certain ETFs are popular( liquid) but Options on very same ETF are not

For example on comparing EEM/VWO , SPY/IVV/VOO etc and I always wonder why some ETFs are popular but options are not. I see a question How to pick ETFs that hedge against stock market crashes? that ...
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2answers
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Too much cash: pay off mortgage, invest in market, or all of the above?

My wife and I have the (pleasant) problem of having too much cash. Part of the reason is that we have been looking to upgrade to a nicer house for the last few years, but we never found the right ...
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2answers
101 views

Time taken to cash out Stock Investments inside Chase internet banking

I invested some money (10k) in the stock market. Chase had introduced a new free feature called INVESTMENTS by JP Morgan . I like the fact that internet banking was showing my stock value right next ...
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1answer
82 views

What were the actual problems of selling your long-term stock holdings during 2007-09?

I would like to know what were the differences of trading US equities during the credit crunch era from someone who had a pertinent experience, since I was a high school kid back then and now I'm an ...
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1answer
47 views

What are the auctions redirecting some retail option orders that the WSJ is referring to and why is it disadvantageous to market makers?

In this article talking about market makers within the options market: Options on key indexes, exchange-traded funds and high-volume stocks dominate trading. Meanwhile, there is less activity in ...
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2answers
141 views

How to read volume in stock market?

I think I'm a bit confused about the volume in stock markets. For example: in tradingview I can see for AMZN the volume in 2 minutes candles is in average 1K-2K, what does it mean? I thought it was ...
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1answer
37 views

Is high liquidity required to fulfill DRIPs?

With DRIPs you get equity instead of cash, but where is this equity coming from? If it's from the existing market then what happens in low liquidity situations?
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1answer
1k views

What is a good measure of liquidity for a stock?

Some stocks are traded a lot and the price graph looks continuous. Others just jump all the time. Which metric could I use to filter the stocks that are not continuous? I don't think volume helps ...
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1answer
169 views

Why would a CD Rate be higher than a Corporate Bond rate?

In looking at my brokerage account for fixed income products, I was looking at both CDs and Corporate Bonds. I was surprised to see that the best 1-year CDs had a higher interest rate than any AAA or ...
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2answers
914 views

Can you sell your REIT stock at any time?

I have only ever bought 3 stocks before, but I am really intrigued by this whole new world. I am thinking about buying some shares of Government Properties Income Trust (GOV), a publicly-traded (on ...
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5answers
9k views

How much money should I lock up in my savings account?

I'm a 28 software engineer. I make around 26k, of which about 40% I set aside every month. In my two-and-a-half years working I now have about 24k savings. I've recently opened an account that allows ...
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2answers
339 views

The most appropriate ways to keep money ready for emergencies?

Background info: My financial planner advised investing money in debt funds, mutual funds as long term investments, where in case of an emergency for large amounts, I could withdraw from the debt ...
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3answers
76 views

What are the gains from more liquidity in ETF for small investors?

One of the often cited advantages of ETFs is that they have a higher liquidity and that they can be traded at any time during the trading hours. On the other hand they are often proposed as a simple ...
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4answers
1k views

How liquid is options market?

My strategy invloves making profits by the increase in "Implied volatility" through long straddles/strangles. Enemy: Time decay. I am aware that the time decay accelerates. I read, For a 9 month ...
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1answer
573 views

How does liquidity affect currency price while trading [closed]

I would like to know what happens to the market when the following situation arises on the GBP/USD currency pair: -Say some big investor sells 100 million pounds but current liquidity in the market ...
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1answer
183 views

Where is the liquidity on European derivatives exchanges

This has bugged me for a long time, and I feel like I am missing some information. When I browse Eurex, a derivatives exchange in Europe, I don't see the kinds of liquidity I would expect. For ...
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2answers
153 views

Liquidity Balance Sheet

Should be or should we not deduct long term debt along with current liabilities from total current assets to arrive at current asset value per share?
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1answer
92 views

Loan against fixed deposit

I have a few FD's locked in for a period of 2 years. However, I am not very liquid at this point and I need access to that money immediately. What are my options? Can I take a loan against my Fixed ...
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1answer
294 views

American trade Hong Kong financial markets (specifically index options)

How can an American get access to the Hang Seng index and index options? This trades in Hong Kong, but really exposure to Hang Seng stocks and derivatives (and index options) in general would be good. ...
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Why deep in the money options have very low liquidity

I understand that OTM options with low deltas are not that attractive, hence liquidity is less. But how about deep ITM options, why is the liquidity not there? Deep ITM options are a cheap way to ...
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Are companies like EquityZen legitimate and useful?

There are a list of companies claiming to provide liquidation for employees who have ISOs in private startups but don't have the means to exercise them (because of the ridiculous amount of phantom tax ...
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A liquid ETF that tracks the us dollar

Are there any liquid ETFs that track US dollar. I can only find this one, but this has very low daily volume (~70k shares) http://www.horizonsetfs.com/pub/en/etfs/?etf=DLR&
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1answer
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Nasdaq vs Nasdaq Trade Reporting Facility

I was sorting through some market data today and was sorting between the three largest ECN/Exchange market centers that I have access to. The top three are: Nasdaq. Nasdaq Trade Reporting Facility. ...
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1answer
736 views

Should a retail trader choose a broker with access to dark pools

Often brokers advise their access to a 'huge' dark pool. If I were an institution trading big lots, then surely I would choose a broker like this. But as a retail trader, does this influence my choice ...
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3answers
5k views

Are precious metals/collectibles a viable emergency fund?

My friend received a gift from a family member in the form of silverware. The exact value is unknown but it is enough to cover 6+ months worth of expenses. It is stored in a place of residency to be ...
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1answer
249 views

How important is volume when choosing an exchange?

I'm investing some money in ETFs; buy and hold. My local currency is CHF. I have an account in Interactive Brokers. So far I've operated on the London Stock Exchange, which means I have to do a forex ...
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1answer
1k views

Relationship between liquidity and an efficient market

If I have two securities A and B(they can be any combo of stock, etf, index, option ), then is it oversimplification to assume that if A has a more liquid market than B, then A is more efficiently ...
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2answers
673 views

Considerations for holding short-term reserves?

About 20% of my income comes in at the beginning of each year from being a business owner. For the past few years, I've been keeping reserves needed to hold me over to the next year in a money market ...
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1answer
8k views

How to understand adding or removing “liquidity” in stock markets with market/non-market orders?

Most explanations on this topic about adding and removing liquidity simply state that market orders remove liquidity and limit orders add liquidity. Is it possible to have a bit more elaborate ...
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Should I prioritize paying down my higher interest debt over building an emergency fund, or vice-versa?

I have a debt of $15,000 at a yearly interest rate of 9%, which can be paid within 5 years. Would it be better for me to: Build first the emergency fund (e.g. liquidity for 6 months' expenses ...
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2answers
14k views

How to sell option with no volume

If there is no volume on options you want to buy/sell, should you do any transactions with those options? Here is my scenario: I recently bought two puts of an industry ETF. A few days later it ...
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2answers
287 views

Looking at Options Liquidity: what makes some stocks so attractive for options traders?

I've noticed that options volumes can vary dramatically between underlying securities. What makes some stocks (e.g. AAPL, BAC) so attractive for options traders?
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4answers
683 views

Does a stock's price represent current liquidation of all shares?

For instance, if a stock is trading at 40 dollars per share, and there are one billion shares being traded, there will be a market capitalization of 40 billion dollars. Let's say the markets are ...
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2answers
2k views

Which is the most liquid market for trading?

I've traded spot forex and I found it really liquid (trades can be executed within a few seconds). However, in NSE (India) share market, it takes between minutes to days to sell the shares I've ...
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1answer
246 views

Models for evaluation of real estate as an investment?

Considered as an investment, real estate differs largely from other investments like equity. E.g. The difficulty in selling (Potential long time span in waiting/hunting for buyer), the much higher ...
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1answer
130 views

How do I research, analyze, and choose the right mutual fund for a roth ira?

I recently opened a Roth IRA in the USA and I'm new to investing. How do I research a mutual fund and what aspects should I analyze to figure out if it fits my investment strategy (I might not even ...
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7answers
2k views

Importance of liquidity in emergency fund?

I know standard rules of thumb are that it is a good idea to have a liquid emergency fund of between of anywhere from 3-8 months of expenses (depending upon the source). How important is liquidity ...
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4answers
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What is high trading volume in a stock indicative of? Is high liquidity a good thing or a bad thing?

At Investopedia - Average Daily Trading Volume - ADTV it says: If trading volume isn't very high, the security will tend to be less expensive because people are not as willing to buy it. But ...
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5answers
805 views

Is there a way to bet on the trade volume of a stock?

Say, stock ABC trades 100,000 shares per day. I feel strongly that in the near future it will trade 200,000 shares per day. Is there an instrument I can buy to profit on this? To be clear, I don't ...
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3k views

Should I wait to save up 20% downpayment on a 500k condo?

Proper 2BRs start at $500k in our neighborhood. We're looking at buying, but I'm leery of the $100k downpayment. It would reduce our savings to 50k liquid and 75k in retirement. I can easily ...
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8answers
952 views

Put idle savings to use while keeping them liquid

Since I graduated from college, I've collected ~$15K USD of savings. Currently this is sitting idle in a low interest checking account. I'd like to put it to better use, but I also need to make sure ...
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13answers
36k views

Is there a good rule of thumb for how much I should have set aside as emergency cash?

I'm buying my very first home, and should be receiving the $8,000 first-time home buyers tax credit. A majority of my savings are going to the down-payment of the house, but we still have a pretty ...