Liquidity

The ease with which an asset can be bought or sold without significantly moving its price. Highly liquid markets like the S&P 500 or major forex pairs have tight bid-ask spreads and deep order books, meaning large orders can be filled quickly. Illiquid assets -- penny stocks, thinly traded bonds, certain crypto tokens -- can experience dramatic price swings on relatively small volume. Liquidity is often taken for granted until it vanishes, as many traders discovered during the 2008 financial crisis and the March 2020 COVID selloff.