Market basics
What is Liquidity?
Hinglish mein padhein: Liquidity kya hoti hai?
Liquidity is how easily you can buy or sell a stock quickly without moving its price much.
Liquid stocks trade in large volumes with a narrow bid-ask spread. Illiquid stocks can have wide spreads and big price jumps on small orders.
Checking average daily volume before trading helps avoid getting stuck in a position.
Related terms
- Bid, ask and spreadThe bid is the highest price a buyer is willing to pay, the ask (offer) is the lowest price a seller will accept, and the spread is the gap between them.
- VolumeVolume is the number of shares traded in a period. It shows how much participation is behind a price move.
- Impact costImpact cost is how much the price moves against you because of the size of your own order.