Markets
Liquidity
How quickly an asset can be bought or sold without moving its price.
Also known as: market liquidity
Updated June 2026
Liquidity measures how easily you can convert an asset to cash at a fair price. Cash is the most liquid; a house or a stake in a private-credit fund is among the least.
Signs of a liquid market
- Tight bid-ask spreads (the gap between buy and sell prices).
- High trading volume.
- Your order doesn’t noticeably move the price.
Why it matters
In a crisis, illiquid assets can become impossible to sell except at a steep discount — “liquidity dries up.” It’s a risk that hides in good times and bites in bad ones.