#TradingPairs101 Liquidity refers to the ease and speed with which an asset can be converted into cash without a significant loss of its value. Cash is the most liquid asset. In a business context, liquidity is crucial for a company to meet its short-term obligations, such as paying salaries or bills.

In financial markets, liquidity is manifested in the ease of buying or selling an asset. A liquid market is characterized by a high volume of transactions and a narrow bid-ask spread, which allows for efficient transactions at fair prices. Low liquidity can result in higher transaction costs and difficulties in trading. It is a key indicator of a company's financial health and the efficiency of a market.