what is illiquid stock

Liquidity Vs Your Patience

What is an illiquid stock?

As the name suggests, illiquid stocks are those in which you cannot liquidate your investments that easily. Essentially these are stocks in which investors cannot find ready buyers because of their limited trading. Stocks that are not traded very frequently or that have a low volume turnover are normally referred to as illiquid stocks. Illiquid refers to the state of a stock, bond, or other assets that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset.

When you say illiquid stocks, ito yung mga stocks na wala halos volume.

Buying an illiquid stock can be rewarding at times pero it will test your patience. Some illiquid stocks go on for years na wala halos galaw. Kapag bumili ka ng stock na wala halos buyer, you will face significant losses kapag e benta mo na ito.

When I was new sa trading I don’t mind buying illiquid stocks. I buy them then wait for it to go up. Few days go by walang galaw. few weeks go by walag galaw. Few months go by walang galaw. Then I decided to sell them kahit may losses. Later I found out na buying illiquid stocks require certain level of patience. Look at this stock for example.

For years wala itong movement then suddenly it went up like crazy.

The same goes sa stock na ito.

If you plan on buying an illiquid stock dapat magkaroon ka ng mahabang patience or e ready mo na sarili mo na may chance na it will stay illiquid for a long time.

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Our advocacy is sharing ideas, experiences and knowledge to traders for FREE. We offer free Technical Analysis, Fundamental Analysis and Market Psychology learning materials for free. 

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One Comment

  • kitbull

    Thank you so much Mam Ganda. Words are not enough to tell you that I am grateful sa lahat lahat ng tinutulong ninyo sa mga bagong traders like me. May God bless you good health and happiness in life. Totoo pala ang kasabihan “the best things in life are FREE”.

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