Thin market

A thin market is a situation in which there are few participants in a stock market who are willing to buy or sell a security. In this case, there can be a substantial spread between bid and ask prices, and the introduction of large buy or sell orders can dramatically impact the price of the security. Consequently, the presence of a thin market is associated with a high degree of price volatility. Investors generally try to avoid securities with thin markets, since they may have to buy securities at inflated prices and may see a sharp price drop when they later offer to sell the securities.

Related Courses

Investor Relations Guidebook 
Public Company Accounting and Finance