Liquidity

Liquidity — a possibility to sell or buy a financial asset when its value shows some minimal changes. Liquidity always decreases during sharp price fluctuations. The higher the level of liquidity, the more opportunities are offered to investors and traders. Liquidity can be considered as the market’s ability to offset significant fluctuations, when a large number of people are selling or buying the same financial assets at the same time. The currency market has the highest level of liquidity. The stock market has lower liquidity, which explains the sharp price hikes during major economic events.