When an asset is described as liquid, it means that it can be easily bought or sold in the market without causing a significant impact on its price. Liquid assets typically have high trading volumes and a large number of buyers and sellers. This ensures that you can enter or exit positions quickly and at a price close to the current market rate.
Liquidity is an important factor for traders and investors alike, as it allows for greater flexibility and reduces the cost of trading in the form of narrower bid-ask spreads. Highly liquid assets are often stocks of large, well-known companies or heavily traded options or futures markets, but liquidity can vary depending on market conditions and other factors.
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