Definition
The term fast market is used to describe a condition whereby the rapid trading of a security results in a delay in the transmission of data concerning sales and price quotes. While a fast market can affect common stocks, the term is more often associated with the trading of options.
Explanation
When securities are traded in a rapid manner, the volume of information exchanged can result in a delay in the updating of electronically available information being passed to traders. This is referred to as a fast market condition. While this can happen with any security, options are particularly susceptible to this problem. A fast market will be accompanied by volatile prices and relatively high trading volumes.
The exchange will formally declare a fast market condition, and once declared, brokers are not held to the same standards as those that apply during normal market conditions. For example, during a fast market price quotes will be delayed and a broker may not be able to execute an order in a timely fashion resulting in sales at less than desirable price points.
Related Terms
The term carrying charge market is used to describe a condition where spot prices are lower than the long-term price of a futures contract. A carrying charge market is considered a normal market condition.
Moneyzine EditorJanuary 10th, 2024
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The term inverted market is used to describe a condition where spot prices are higher than the long-term price of a futures contract. An inverted market is considered an abnormal market condition.Moneyzine EditorJanuary 22nd, 2024- The term seller's market is used to describe a condition whereby demand for an asset exceeds supply, thereby providing sellers with negotiating leverage. While a seller's market can apply to the sale of any asset, it's oftentimes associated with the real estate market.Moneyzine EditorSeptember 21st, 2023
The term buyer's market is used to describe a condition whereby the supply of an asset exceeds demand, thereby providing buyers with negotiating leverage. While a buyer's market can apply to the purchase of any asset, it's oftentimes associated with the real estate market.Moneyzine EditorJanuary 9th, 2024
