When an asset is said to be liquid it means that there is a great deal of buying and selling of the asset. This makes it easy to sell since there are plenty of buyers willing to pay the market price for the asset. When an asset is liquid it also means that selling, even large amounts, has little impact on the price of that asset. Liquidity is typically thought of as very good, since a lack of liquidity means a trader could get trapped in a position with no buyers as price falls sharply.