What are liquids trades?
Asked 4 years ago
I'm quite new to the stock market as a whole, and I've been seeing the term 'liquid trades' floating about. Can someone please explain what this term means?
Andia Rispah Igobwa
Tuesday, April 13, 2021
To understand liquid trades, let's define liquidity.
Liquidity refers to how easily you can sell an asset. Can you quickly turn that asset into cash?
Assets can include houses or even stocks.
Therefore, liquid trades are those stocks that you can buy and quickly sell without their price changing.
Let's say two stores are selling books. Store X sells old books, and Store Y has a mix of old and current reads. Store Y ends up selling more because it offers a variety.
Books in Store X stay on the shelves for years until their prices start going down. Therefore, Store X doesn't have good liquidity as it's not able to convert its assets into cash in good time.
Most of the time, a low-priced stock isn't liquid. If stocks aren't liquid, they are referred to as illiquid.
Aim for liquid trades as it means a stock has enough traders to keep it moving.
Please follow our Community Guidelines
Related Articles

How Does Stock Market Tax Work?
Sofia Thai
April 23, 2021

The Best Appreciating Assets to Invest In
Filip Dimkovski
June 15, 2021

Forex Standard Account vs. Raw Spread: What’s the Difference?
Andrew Moran
December 23, 2024
Related Posts
Filip Dimkovski
The Most Important Basic Trading Rules
Filip Dimkovski
The Best Sources for Investment Advice
Andrew Moran
How to Know When to Buy, Sell or Hold Stocks
Thorsten Steins
How Do You Know When to Sell Your Stock?
Can't find what you're looking for?