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Impact cost

Impact cost measures how much the executed price moves away from the ideal mid price for a given order size.

NSE publishes impact-cost statistics used in liquidity screening for index eligibility.

Lower impact cost indicates a tighter, more liquid order book for that size.

Illiquid mid and small caps often show high impact cost even if the last traded price looks calm.

Traders use impact cost concepts when sizing orders so they do not move the market excessively.

Part of the Market Pulse Term of the Day series — factual market vocabulary, not investment advice.