Listen to a Business English Dialogue About Minimum fluctuation
Emily: Hey Morgan, do you know what “minimum fluctuation” means in finance?
Morgan: Hi Emily! Yes, it refers to the smallest allowable change in the price of a financial instrument, like a stock or commodity.
Emily: Ah, got it. So, if the minimum fluctuation for a stock is $0.01, it means the price can only change in increments of one cent?
Morgan: Exactly, Emily. It helps maintain orderly trading by setting a limit on how much the price can move at once.
Emily: That makes sense. Does the minimum fluctuation vary depending on the financial instrument or market?
Morgan: Yes, Emily. Different markets and instruments have different minimum fluctuation rules, depending on factors like liquidity and volatility.
Emily: Interesting. So, a highly liquid market might have a smaller minimum fluctuation compared to a less liquid one?
Morgan: That’s right, Emily. In liquid markets, even small price changes can represent significant value, so the minimum fluctuation tends to be smaller.
Emily: I see. And does the minimum fluctuation affect trading strategies or investment decisions?
Morgan: Absolutely, Emily. Traders and investors need to consider the minimum fluctuation when placing orders or analyzing price movements.
Emily: Thanks for explaining, Morgan. It’s important to understand how minimum fluctuation impacts trading.
Morgan: No problem, Emily. If you have any more questions about finance or trading, feel free to ask.
Emily: Will do, Morgan. Thanks again for your help!
Morgan: Anytime, Emily. Happy to help!