Glossary
Liquidity
Markets
Liquidity is how easily an asset can be bought or sold in size without materially moving its price.
Deep liquidity shows up as tight spreads, large resting order-book size and small market impact. EUR/USD during the London-New York overlap is among the most liquid markets in the world; an exotic pair at the Asian open is not.
Liquidity is not constant. It evaporates around scheduled data, at rollover and during holidays — which is exactly when spreads widen and slippage appears.