What Is a “Stale Price” in a Thinly Traded Market?
A stale price is a quoted price that does not reflect the current fair market value of an asset because there have been no recent trades or quotes. In a thinly traded market, a lack of trading activity means the last recorded price may be significantly different from the price at which a trade could actually be executed.
Stale prices can lead to incorrect valuations.
Glossar
Lack of Trading Activity
Liquidity ⎊ This condition is characterized by insufficient depth in the order books of derivative contracts, resulting in wide bid-ask spreads and high market impact for moderate trade sizes.
Fair Market Value
Benchmark ⎊ This value represents the consensus price at which an asset or derivative contract would trade between two informed, willing, and uncoerced counterparties in an efficient market.
Quoted Price
Offer ⎊ The quoted price represents the current standing bid or ask price disseminated by an exchange or dealer for a derivative contract, signifying an immediate, though conditional, willingness to transact.
Stale Price
Price ⎊ The term "stale price" in cryptocurrency derivatives, options trading, and related financial instruments denotes a market quotation that is considered outdated or no longer reflective of current market conditions.
Stale Prices
State ⎊ Stale Prices refer to the condition where the quoted price of an asset within a decentralized exchange's liquidity pool or an oracle is significantly out of sync with the true market price on external, high-volume exchanges.