Frictionless Market

A frictionless market is an idealized concept where all transactions occur seamlessly without any barriers, costs, or delays. In a frictionless market, there are no taxes, fees, bid-ask spreads, or information asymmetries, allowing buyers and sellers to trade at fair prices with complete transparency. While true frictionless markets do not exist, advances in technology and electronic trading platforms aim to reduce friction by enhancing speed, efficiency, and access to market information.

Example

Electronic trading platforms strive to create frictionless markets by offering low fees, instant order execution, and transparent pricing, reducing the barriers to trading financial assets.