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by throw-qqqqq
458 days ago
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> What would happen if equity markets were only open a very short period a day? I think about it like this: How stable are prices of low liquidity instruments compared to the most liquid instruments? What happens in the first 10-15 mins after the markets open? EXTREME volatility. Longer trading sessions, higher volume and more liquidity lowers volatility on average. A hypothetical X percent worse spread on my mortgage bonds, means I have to borrow X% more to buy the house. That’s meaningful money for most people. Market makers will still earn the spread. More trading just means it gets lowered because of competition and volume. |
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