Below #交易流动性 continues to introduce you to the relevant content of trading liquidity:

4. Main Sources of Liquidity (Continued)

• Bid-ask spreads, such as designated market makers (DMM) on the NYSE providing liquidity for stocks.

2. High-Frequency Traders (HFTs)

◦ Utilizing advanced algorithms and technology to quickly buy and sell assets, profiting from tiny 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., engage in large-scale trading 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.

5. Factors Affecting Trading Liquidity

1. Number and Types of Market Participants

◦ The more participants and diverse types, the higher the market liquidity. For example, the forex market, due to the participation of numerous banks, enterprises, and individuals globally, has become one of the most liquid markets.

2. Characteristics of Assets

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

◦ Popularity and Recognition of Assets: Stocks of well-known companies (such as Apple, Microsoft) typically have higher liquidity compared to stocks of lesser-known small companies.

3. Transparency of Market Information

◦ Markets with sufficient and timely information disclosure allow investors to accurately assess asset values and are more willing to participate in trading, thereby increasing liquidity, such as securities markets where listed companies disclose financial reports and other information as required in a timely manner.

4. Trading Mechanisms and Market Rules

◦ Trading Hours: Markets with longer trading hours (such as the global forex market, which trades almost 24 hours) have better liquidity.

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

6. 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,