Liquidity in financial markets denotes the ease and speed with which assets can be traded without causing significant price fluctuations. A high level of liquidity indicates that trades can be executed swiftly at current market prices, ensuring efficiency and transparency in the market. Conversely, low liquidity implies that buying or selling an asset could potentially impact its market price due to fewer available buyers or sellers.

For instance, highly liquid assets include widely traded currency pairs in the Forex market, shares of large-cap companies on major stock exchanges, and popular cryptocurrencies traded on well-established platforms. These assets are in constant demand and supply, facilitating quick transactions with minimal price impact.

On the other hand, assets with low liquidity might include lesser-known cryptocurrencies, stocks of smaller companies, or high-value real estate properties. Transactions involving these assets can be more challenging and time-consuming due to fewer market participants and limited trading activity.

In summary, liquidity plays a crucial role in determining the ease of trading and market stability, influencing how quickly and efficiently assets can be bought or sold at fair market prices.