Trading and Exchanges Chapter 19: What Liquidity Really Means and Why It Matters
Everyone in finance talks about liquidity. Traders want it, exchanges advertise it, regulators worry when it disappears. Yet if you ask five people what liquidity actually means, you will get five different answers. Chapter 19 is where Harris finally pins it down. His definition is simple: liquidity is the ability to trade large size quickly, at low cost, when you want to trade. That is it. But the simplicity hides a lot of complexity.