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  1. Glossary
  2. Market basics
  3. Liquidity

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.
Limit orderListing gains

Still unsure?

Ask Sensa to explain Liquidity with an example

More in Market basics

  • Bear market
  • Bull market
  • Demat account
  • Market correction
  • Paper trading
  • Stock
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