#Liquidity101 In the world of trading, "liquidity" refers to the ease with which an asset can be bought or sold in the market without significantly affecting its price. Essentially, it measures the market's ability to facilitate quick and efficient transactions. Below is a more detailed explanation: High liquidity: This means there are many buyers and sellers, and an asset can be traded quickly at a stable price. Think of liquid markets like the stock market for large and popular companies. Low liquidity: This indicates a lack of buyers and sellers, making it difficult to find a counterparty to buy or sell an asset. Illiquid assets can be found in niche markets or in lesser-known assets.