What is liquidity in trading?

What Is Liquidity in Trading?

Liquidity is how easily you can buy or sell an asset at a stable price. In a liquid market, large orders can be filled without much price impact. In an illiquid market, a modest order can move the price (slippage). Liquidity comes from the order book: more bids and asks at various prices mean more liquidity. Major pairs (e.g. BTC/INR, ETH/USDT) are usually liquid; small altcoins can be illiquid. Check volume and depth before placing large orders. Low liquidity can also mean wider spreads and higher risk of not filling at your price.