Skip to Content


What is liquidity?

Liquidity is the ability to sell an investment at a certain quantity without affecting its price.

An investment’s liquidity is important to keep in mind when selling an investment. If an investor wants to sell a very liquid stock, the investment’s price won’t fall very much.

For an illiquid asset, the seller usually takes a lower price because of the lack of demand, and the degree of this price drop is considered the discount risk.