What Is Liquidity?
How easily an asset can be bought or sold without moving its price. Liquid markets have tight spreads and deep order books. Trading illiquid contracts with leverage invites slippage on entries, exits and especially liquidations.
Related Terms
- Order Book The live list of all outstanding buy orders, called bids, and sell orders, called asks, for a market.
- Slippage The difference between the price you expected and the price you actually got.
- Spread The gap between the best bid and the best ask.
Where You Will Meet This Term
You will run into liquidity constantly on any futures exchange, from the order panel to the position dashboard. If you are still building your foundation, our guides on leverage, liquidation and risk management connect the vocabulary into an actual trading process, and the full glossary covers every other term you will encounter.