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Investing & the Stock Market vocabulary · Markets & Indices

Liquidity

Meaning in investing & the stock market, with examples

/lɪˈkwɪdəti/nounCore term

In investing & the stock market, liquidity means: How easily an asset can be bought or sold quickly without a big change in its price. A liquid market has many buyers and sellers.

In Turkish: likidite, nakde çevrilebilirlik

How it is used

Traders and fund managers talk about the liquidity of a stock, a bond or a whole market. Liquidity dries up in a crisis and improves when more investors trade. The adjectives are 'liquid' and 'illiquid'. In economic news, 'liquidity' can also mean money supply in the system.

Example sentences

  1. Large banks offer good liquidity, so you can sell big positions quickly.

  2. Liquidity dried up in corporate bonds during the crisis.

Common collocations

  • high liquidity
  • low liquidity
  • liquidity dried up
  • market liquidity
  • liquidity risk
  • trading volumeThe number of shares or contracts traded, or their total value, during a given period such as one day.
  • bid-ask spreadThe difference between the highest price a buyer is offering (the bid) and the lowest price a seller will accept (the ask) for a security at a given moment.
  • free floatThe part of a company's shares that can actually be traded on the market, excluding shares held by controlling owners, the state or other long-term holders.
  • market orderAn instruction to buy or sell a security immediately at the best price currently available, without setting a price limit.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Markets & Indices

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This page explains English vocabulary for learners. It is not financial advice.