Glossary
Liquidity
Liquidity is how easily an instrument can be traded without moving its price. High liquidity means tight spreads and easy fills.
Liquidity describes how easily you can buy or sell an instrument without shifting its price. A highly liquid market — like the major currency pairs during peak hours — has tight spreads, deep order books, and quick fills. A thin, illiquid market has wider spreads and more slippage.
Liquidity drops at session changes, over weekends, and around major news, which is exactly when off quotes and slippage spike.
Trading liquid instruments at active hours is one of the simplest ways to keep costs and execution clean.
Related terms
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