Below #交易对 continues to introduce relevant content about trading liquidity:

Four, Main Sources of Liquidity (Continued)

• Bid-ask spread, such as the designated market makers (DMM) on the New York Stock Exchange providing liquidity for stocks.

2. High-Frequency Traders (HFTs)

◦ Utilizing advanced algorithms and technology to rapidly buy and sell assets, profiting from small price fluctuations while increasing market depth and liquidity, such as some quantitative hedge funds employing high-frequency trading strategies.

3. Large Financial Institutions and Investors

◦ Banks, mutual funds, pension funds, etc., conduct large-scale trades in the market, and their trading activities also provide a certain level of liquidity, but their trading decisions are usually based on long-term investment goals and market analysis.

Five, Factors Affecting Trading Liquidity

1. Number and Type of Market Participants

◦ The more participants and diverse types there are, the higher the market liquidity. For example, the foreign exchange market is one of the most liquid markets due to the participation of numerous banks, corporations, and individuals globally.

2. Characteristics of the Asset

◦ Homogeneity of the asset: Standardized and homogeneous assets (such as gold futures contracts) have better liquidity due to their ease of valuation and trading.

◦ Popularity and Recognition of the Asset: Stocks of well-known companies (such as Apple and Microsoft) typically have higher liquidity than stocks of lesser-known small companies.

3. Transparency of Market Information

◦ In markets where information is disclosed thoroughly and timely, investors can accurately assess asset values and are more willing to participate in trading, thus enhancing liquidity, such as stock markets where listed companies timely disclose financial reports as required.

4. Trading Mechanisms and Market Rules

◦ Trading Hours: Markets with longer trading hours (such as the global foreign exchange market trading almost 24 hours) have better liquidity.

◦ Price Limits: Appropriate price limits can stabilize the market, but excessive restrictions may suppress liquidity, such as the price limit system in A-shares.

Six, How to Measure Trading Liquidity?

1. Bid-Ask Spread Method

◦ Calculate the ratio of the bid-ask spread to the asset price; the smaller the ratio, the higher the liquidity. For example, if a stock's buy price is 10 yuan and the sell price is 10.05 yuan,