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A particular stock, sector, or market is said to be thinly traded if transactions occur only infrequently, and there are a limited number of interested buyers and sellers.
Prices of thinly traded securities tend to be more volatile than those traded more actively because just a few trades can affect the market price substantially.
It can also be difficult to sell shares of thinly traded securities, especially in a downturn, if there is no ready buyer. Shares of small- and micro-cap companies are more likely to be thinly traded than those of mid- or large-cap stocks.
- Browse Related Terms: Fast market, Market timing, Market value, Overbought, Penny stock, Slow market, Soft market, Suspended trading, Thin market, Thinly traded