A liquid market can be defined as a market with numerous accessible purchasers and sellers and comparatively low exchange costs. The subtleties of what makes a market liquid may differ based on the resource being traded.
In a liquid market, it is not difficult to execute an exchange rapidly and at an alluring price in light of the fact that there are various purchasers and sellers and the good being traded is institutionalized and sought after.
In a liquid market regardless of day by day changes in supply and demand the spread between what the purchaser wants to pay and what sellers will offer remains comparatively small.
Something contrary to a liquid market is known as a "thin market" or an "illiquid market."
Illiquid markets may have significantly enormous spreads between the highest accessible purchaser and the lowest accessible seller.
Liquid markets are generally found in financial securities such as forex, futures, bonds as well as stocks.
Markets for expensive tangible products, for example, items of luxury, heavy industrial equipment or houses are considered thin markets.
In any case, even financial assets can likewise be meagerly exchanged based upon a various factors that include the hour of day, the immediate situation of a given market, or the relative visibility of the security.