What is Market Impact?
Market Impact The effect that a trade or series of trades has on the price of a security or asset, a critical consideration in execution and transaction cost analysis.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Market Impact” Used in Practice?
Algorithmic trading models aim to minimize market impact by breaking large orders into smaller transactions executed over time.
Certification Exam Relevance
Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Market Impact?
The effect that a trade or series of trades has on the price of a security or asset, a critical consideration in execution and transaction cost analysis.
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