Liquidity

Market liquidity refers to an asset's ability to be easily converted through buying or selling without causing a significant movement in the price and with minimum loss of value. A market may be considered deeply liquid if there are ready and willing buyers and sellers in large quantities.

A liquid asset has some or more of the following features. It can be sold (1) rapidly, (2) with minimal loss of value, (3) anytime within market hours. The essential characteristic of a liquid market is that there are ready and willing buyers and sellers at all times.

The liquidity of a product can be measured as how often it is bought and sold; this is known as volume. Speculators and market makers are key contributors to the liquidity of a market, or asset.