Liquid and Illiquid Market

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Liquid market is a type of market whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset's price. Cash is,of course still considered as the standard for liquidity,because it can be easily converted into other assets.

Illiquid market is a market in which there is difficulty in buying or selling assets due to lack of interested buyers or sellers. Assets in illiquid markets may have value and in many cases, very high value, but are simply difficult to either buy or sell. Examples of illiquid markets include real estate, fine arts, some stocks with low trading volume and collectibles.

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