A heavy market is a market experiencing a downward shift in prices because the number of sell orders outstrip buy orders. Sellers trying to unload securities or commodities struggle to find buyers, while buyers can afford to be choosy about pricing because they have a number of offers to choose from. An entire market can be heavy, or an isolated sector may experience a period of heaviness. Trading under these conditions is challenging and can expose people to increased financial risk.
In healthy markets, people buy and sell at roughly equal rates. People looking for something to buy can find a range of offers and people who need to sell can easily access buyers. When investors start to lose confidence, they tend to try and sell off more of their investments, creating a heavy market. Buyers decline because less people are interested in making purchases, concerned about further drops in market value, while sellers increase as more people try to unload securities in response to the downward slide.
Heavy markets can develop in a matter of minutes in response to catastrophic events or may unfold over the course of hours or days. In such markets, people who can afford to hang on to their investments are usually advised to do so. They will not be able to get a good price for them and can take losses in the hunt for a buyer. People who are able and willing to buy in a heavy market, on the other hand, may be able to find good deals by negotiating with desperate sellers.
Eventually, heavy markets experience a turnaround. The number of buyers increases, often in response to people who think they can get good prices on investments, and the value of the market starts to go back up as buyers become more competitive and increase in number. With rising prices, it becomes a seller's market, as sellers can hold out for better offers from buyers, driving prices back to a higher level.
Skilled investors can profitably ride out a heavy market and benefit from the upward trend at the end, as well. Investors who are overstretched or less savvy may find themselves in a situation where they take significant losses as a result of a heavy market. In some cases, this can bankrupt investors, as they cannot keep pace with the changing prices and may be subject to issues like margin calls if their investment accounts dip below a certain amount.