What is the Liquidity?

Modified on Fri, 9 Aug at 5:37 PM

Liquidity measures the ease and speed with which we can buy or sell a specific financial instrument, so the more liquid a market is, the easier it will be to access it, and therefore, it will require less effort.


In highly liquid markets, there are more participants, which means that we can sell off our position more quickly and with less risk. As a result, the spreads in these markets will be narrower compared to less liquid markets.


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