Liquidity
How easily an asset can be traded without materially moving its price.
Plain languagePractical exampleConnected reading
01
What is it?
How easily an asset can be traded without materially moving its price.
02
Why does it matter?
Higher liquidity usually supports lower trading costs and more reliable price discovery.
03
How should it be read?
Read volume, bid-ask spread and order-book depth together.
04
Common mistake
Assuming high daily volume always means deep liquidity.
A simple example
A heavily traded index stock may absorb a large order with less price impact than a small-cap stock.