understanding liquidity

understanding liquidity for synthetic/volatility indices introduction to liquidity in the simplest way possible, liquidity is a measure of the ease of ability to enter and exit a market at the desired price based on the number of buyers (bids) and sellers (asks/offers) in that market. the primary objectives of the market maker in respect to liquidity is; ● to make a market in by buying and selling from their own inventory, when public orders to buy or sell the asset are absent. ● to keep the market book of orders, consisting of limited orders to buy and sell, as well as stop orders placed by the general market participants. generally, if you understand these two points, you will know how …

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