Liquidity determines how easily something can be bought and sold. High liquidity makes it easier to quickly buy or sell, low liquidity makes buying and selling quickly more difficult. In share trading, you might want to pick shares with high liquidity if you’re planning on opening and closing a lot of positions in a short period of time.
In a market with high liquidity, you might find that bid-ask spreads are tighter – which would help to bring your total costs down when trading. On the other hand, in a market with low liquidity, spreads could widen and increase the cost of your trade.