Deep Market

When mentioning liquidity in financial markets, take it on faith that one is not referring to beverage stocks like Coca Cola or Anheuser-Busch. When investing or trading in any market, liquidity levels (how easy it is to buy or sell in varying quantities) is a crucial factor for gauging risk.

When liquidity is shallow, the market is said to be thin, so purchasing or selling 100 shares may be negligible to the bid/ask spread, but a 1,000 share order might move it. A deep market, meaning liquidity is substantial, can easily absorb trades on either side of moderate to larger size. Securities that are ubiquitous, such as Microsoft or Apple, are considered to have deep markets, as opposed to some Pink Sheet companies, which may not even post daily trading. Most major currencies traded in Forex are deep market, although obscure currencies can experience greater volatility.