Liquidity refers to how easily and quickly an asset can be bought or sold in the market without affecting its price.


💧 In Trading Terms:

  • High liquidity = lots of buyers and sellers, tight bid/ask spreads, fast execution.
  • Low liquidity = fewer participants, wider spreads, slower fills, and more slippage.

📊 Examples:

Asset TypeLiquidity LevelWhy?
Apple stock (AAPL)HighTraded by millions daily
Micro-cap penny stockLowFew buyers/sellers, volatile
S&P 500 futuresHighInstitutional volume, 24/7 market
Exotic crypto tokenLowThin volume, limited exchanges

🧠 Why It Matters for You:

  • Tighter spreads mean better pricing.
  • Faster fills reduce execution risk.
  • More volume gives you flexibility to scale in/out.

Liquidity is your lens for spotting efficient markets. Want to explore how to scan for high-liquidity setups or build a screener for it?

What is Liquidity