What is illiquidity and can it make or break your trades?
"The market can stay irrational longer than you can stay solvent." – John Maynard Keynes
Ever wondered about the ease or difficulty of selling an asset at a fair price?
Take Apple’s stocks, for instance – trading them is as smooth as selling ice cream on a hot day, thanks to their high demand.
On the other hand, selling something like a rare antique coin or the stocks of a smaller company can be more challenging.
That’s illiquidity in action, and it can cost you big time. Let’s find out how to spot illiquidity and avoid its pitfalls.
What are illiquid assets? Identify them before you trade
Not all assets are created equal. Here’s how to identify potential liquidity landmines before you invest or trade:
The price of illiquidity: What’s the catch?
Illiquidity isn’t just an inconvenience; it can hurt your bottom line:
Liquidity trading hacks: Strategies for savvy traders
Don’t let illiquidity put a damper on your trading goals. Here are some battle-tested strategies to navigate it:
Liquidity trading with Deriv
Illiquidity is a fact of life in the trading world, but it doesn’t have to be a showstopper. By understanding the signs and implementing smart strategies, you can navigate these challenges and keep your trading journey smooth sailing. Remember, a healthy balance between liquidity and potential returns is key to unlocking your trading potential.
On Deriv, you can explore a wide range of assets, from highly liquid options like forex and major stock indices to more specialised offerings. Open a free demo account on Deriv and start practising diversification strategies in a risk-free environment. See firsthand how staying liquid empowers you to react to market opportunities and navigate challenges with confidence.
Disclaimer:
Trading is risky. Past performance is not indicative of future results. It is recommended to do your own research prior to making any trading decisions.
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