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What is resilience?


One of the measures of a market's liquidity. It can describe how quickly prices in a particular market return to normal following a large order.

It's a similar concept to immediacy, which highlights how quickly an order can be fulfilled in a market.

Where have you heard about resilience?

Investors may use the term when talking about the liquidity of a market, for example a stock market. If prices quickly bounce back following a large order, a market is seen to be resilient and functioning well.

What you need to know about resilience.

A large order can cause temporary price disruption in a market. For example, the sale of a large block of shares in a relatively small company may lead to a drop in their price. Resiliency gauges how quickly a market responds to prices that are temporarily incorrect.

More broadly, liquidity is an important issue to consider before investing in a particular market. It shows how easily assets can be bought and sold at a stable price. Weak liquidity means it's generally harder to trade effectively within a market.

Find out more about resilience.

Investors can review a market's liquidity in a number of ways. For more on this, see liquidity risk and illiquidity.

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