What Is Thinness or Thickness in the Stock Exchange Trading?

Thinness or thickness in stock exchange trading describes what is currently happening in the stock market. This affects investors' expectations.

Thin Market

According to CSI Global Education, if a stock market is described as thin, "there are relatively few bids to buy or offers to sell" in the stock exchange. This results in a larger difference in price between transactions that do take place.

Thin Stock

The term "thin" can also apply to a stock. If a stock is considered to be thin, this means that not many people are buying or selling a particular stock.

Thick Market

A thick market occurs when there is high volume of trading on a particular exchange. When a market is thick, transactions that occur on the exchange will be very similar in price.

Thick Stock

A stock can also be described as a "thick" stock. This means that a lot of people are buying or selling a particular stock.

Market Considerations

People should be cautious when buying thin stocks because they may be harder to sell in the future. If a market is thin, this indicates a lack of investor confidence in the market. Since the stock market is based on investor expectations and leads economic activity, a thin stock market often means that a market slowdown is on the horizon.

References

• "Canadian Securities Course Volume One"; CSI Global Education; 2008