If the amount of money being moved is large (relative to the turnover of the asset(s) in question), then the market impact can be several percentage points and needs to be assessed alongside other transaction costs (costs of buying and selling).
Some financial intermediaries have such low transaction costs that they can profit from price movements that are too small to be of relevance to the majority of investors.
Under this measure, a highly liquid stock is one that experiences a small price change for a given level of trading volume.
[3] Microcap (and nanocap) stocks are characterized by a market cap under $300mn ($50mn) relatively limited public float and small daily volume.
As a result, these stocks are extremely volatile and susceptible to large price swings.
[4] Microcap and nanocap traders often trade in and out of positions with huge blocks of shares to make quick money on speculative events.
And therein lies a problem that many microcap and nanocap traders face—with so little float available, thin volume and large block orders, there is a shortage of shares.