Liquidity Risk
Liquidity risk is the potential for loss arising from the inability to buy or sell an asset quickly enough at a favorable price.
Liquidity
Liquidity refers to the ease with which an asset can be converted into cash without significantly affecting its price.
Market Capitalization
Market capitalization is calculated by multiplying a company’s total number of outstanding shares by its current share price.
Market Capitalization Weighting
Companies with larger market capitalizations (total value of outstanding shares) have a greater impact on the index’s price.
Market Liquidity
Market liquidity refers to the ease with which an asset can be bought or sold without significantly impacting its price.
Market Maker
A market maker is a broker or entity that facilitates trades by quoting bid and ask prices, with their compensation for this service reflected in the bid-ask spread.
Market Order
A market order is an instruction to execute a trade at the best available price in the market, guaranteeing execution but not a specific price.
Market Session Overlaps
Market session overlaps are periods when two or more major trading sessions are active simultaneously, leading to increased liquidity, tighter spreads, and greater volatility.
Negative Correlation
Conversely, a negative correlation means two currency pairs typically move in opposite directions.
Order
An order is a client’s instruction to a brokerage company to perform a trade operation, such as buying or selling a financial instrument.