Thinly Traded

Thinly traded

Infrequently traded.

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Thinly Traded

A term describing an inactive or infrequently traded bond or stock. Thinly traded securities are usually traded in small batches, approximately five shares at a time. Thinly traded securities are fairly illiquid and may be difficult to sell in a downturn. Their prices are also volatile because a small change in demand can greatly affect the price. Thinly traded securities are sometimes called cabinet securities because they are kept in cabinets on the trading floor until they are needed. See also: Cabinet crowd, Inactive post.

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Thinly traded. 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.