Liquid Market

A liquid market is a market in which an asset can be bought or sold quickly, in meaningful amounts, without pushing its price far from the last trade. Such markets have many active buyers and sellers, high trading volume, a narrow bid-ask spread and deep order books, so large orders suffer little slippage. Major currency pairs, large-company shares, government bonds and the largest cryptocurrencies on big exchanges are usually liquid; small-company shares, property, collectibles and newly launched tokens usually are not. Liquidity can vanish in a crisis, when buyers step back at the same moment many holders want to sell, which is why traders watch market depth as well as headline volume. A liquid market should not be confused with a liquid asset, which describes how easily a holding can be turned into cash.