Liquidity describes how easily an asset can be exchanged without causing a large price movement. It is not one number: volume, order-book depth, spread, venue access, and market conditions all shape the result.
Spread and depth
The spread is the gap between the best available buyer and seller. Depth shows how much quantity sits at progressively different prices. A narrow spread with little depth can still produce substantial slippage on a large order.
Why reported volume is not enough
Volume summarizes completed activity, not the quality of the next execution. Compare several time periods, inspect visible depth, and consider whether activity is concentrated on one venue or pair.
Practical caution
Use limit orders when appropriate, avoid treating a displayed last price as guaranteed, and size activity according to real depth. Liquidity can disappear quickly during stress.
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