In trading, what does liquidity mean and how does it work
In: Economics
It’s how fast you can turn something to cash. High liquidity means you can sell it quickly and get your cash back. Low liquidity is more like a house. If you need the money today, it ain’t gonna happen.
Edited to add that if something is not very liquid (like a house) the only way to sell it quicker is to sell it at a discount. Hence price can have an affect on liquidity. Stores do this with items that aren’t selling well when they would rather have the cash again.
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