What is the active market?
The active market is a freely defined phrase referring to a significantly high level of trading. This type of market has some distinct properties. This in turn brings investors specific risks and opportunities.
There are two different meaning for the "active market" sentence. One is for the market in a particular or other financial product. The second is for the whole market, such as the US stock market.
The active market will usually be relatively liquid. This is how easy it is to buy or sell the product without causing its price to change. In general, larger investors prefer the liquid market because it is easier to sell assets quickly if, for example, a customer wants to earn their investments.
On a market that is not particularly liquid, the sale of assets can suddenly cause a market price, which may limit or even cancel the benefits of sales at the moment. Similarly, you are trying to buy shares in the illicit market can move the price above the price that the buyer counted on the payment. Presence andThe which is particularly welcome for large institutional investors because they are engaged in larger volumes, thus pose a greater risk of their transactions distorted price.
Another remarkable characteristic of the active market is the lower range/query range. This is the difference between the measures for the purchase and sale of a specific commodity, shares or other products. There is a span because someone who buys shares risks that he will not be able to sell it when they want. The more active the market is, the higher the chance they will not have to wait so long to find the buyer. The span is effectively the price that a person who wants to buy or sell must pay to ensure that they get an immediate business.
The phrase should not be confused with the active market manage or investment. This is a strategy in which the investor or fund manager specifically issues a choice of individual shares or other FinnsNamed products that they believe will work disproportionately well. This is different from the passive market or investment, which aims to select a representative range of shares that work mainly in accordance with the market as a total, thus theoretically minimizing both the overall risk and potential for magnificent profits or losses.