Trading volume is high Another commonly used measure of liquidity is trading volume. Figure 4 shows trading volume in the corporate bond market. This measure is important because low trading volumes may indicate that high transaction costs have deterred investors from making trades, a phenomenon that transaction cost measures would clearly miss because they are calculated from actual trades.
The trading volumes depicted in the figure show no obvious signs of a current problem with market liquidity. In 2006, investors traded an average of $ billion a day. During the height of the financial crisis, trading volume decreased to $ billion a day, but, by 2009, volumes appeared to have fully recovered. Today trading volumes are at about $ billion a day.