What Is Market Liquidity? An Educational Guide
Liquidity enables efficient price discovery, as readily available buyers and sellers contribute to a more accurate reflection of an asset’s actual market value. In illiquid markets, large trades can lead to substantial price fluctuations. Liquidity in trading is the ability of buyers and sellers to transact assets and securities like stocks, currency pairs, and bonds at a fair price. Liquidity relies on the speed and efficiency with which an asset can be converted into cash without affecting its price. High…