Market Microstructure
Market microstructure examines the detailed mechanics of how trades execute, including order books, price formation, liquidity provision, and transaction costs.
Bid-Ask Spread
The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller will accept (ask).
Market Liquidity
Liquidity refers to how easily an asset can be bought or sold in the market without causing significant price changes.
Market Makers
Market makers are firms or individuals that continuously quote both buy and sell prices for securities, providing liquidity and facilitating trading.
Order Book
An order book is an electronic list of buy and sell orders organized by price level, showing market depth and real-time supply and demand.
Slippage
Slippage is the difference between the expected price of a trade and the actual price at which it executes, occurring due to market volatility and liquidity.