Liquidity
Liquidity is how quickly and easily you can buy and sell an investment without affecting its price.
Quick reference:
High liquidity: Lots of buyers and sellers, easy to trade. Low liquidity: fewer traders, harder to sell quickly.
Expanded explanation:
When an investment is liquid, it means you can trade it quickly at our near current market price. Large companies on the ASX, like BHP or Commonwealth Bank, are highly liquid because thousands of people trade their shares daily.
Smaller companies may have fewer buyers and sellers, so selling quickly might mean lowering your price, or waiting longer for a buyer. Liquidity is important for investors who want flexibility and confidence they can exit their position when needed.
Related links + Articles:
• Broker.