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What is the difference between market liquidity and volatile market?

Market liquidity refers to the depth of buy and sell orders. A liquid market is one where you can buy or sell quickly. Volatility refers to a market’s rate of change. A volatile market is one in which price changes rapidly over a short period of time. The level of liquidity tends to affect technical analysis.

Does volatility affect liquidity provision in financial markets?

In particular, the overall liquidity provider portfolio lies almost exactly on the 45-degree line. Volatility risk thus again explains the liquidity premium in the cross section of stocks. Our results provide a new perspective on liquidity provision in financial markets.

What is volatility & how does it affect a market?

Volatility is the measure of how drastically a market’s prices change. A market’s liquidity has a big impact on how volatile the market’s prices are.

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