Quick answer
Liquidity: Liquidity is how easily you can buy or sell without moving the price; the CFTC describes a liquid market as one where trades happen with minimal effect on price.
Also called: market depth
Explained, with an example
In practice, liquidity shows up as a tight Bid-ask spread and a lot of size resting near the best prices [1]. Odds-API.io's prediction-market data includes order-book depth fields (e.g. depthHome) next to the back and lay prices, so you can see whether a price is backed by real size [2]. Reported volume alone is a weak signal, because Wash trading can inflate it.
Try it: tools and tutorials
Frequently asked questions
What is liquidity?
Liquidity is how easily you can buy or sell without moving the price; the CFTC describes a liquid market as one where trades happen with minimal effect on price.
About this guide
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Author: Ken Lin · Corrections: if you spot an error, we review it and date-stamp the fix.
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Sources
- CFTC Glossary (binary option, DCM, order book, liquid market, market maker, settlement, wash trading, arbitrage, hedging) — U.S. CFTC, accessed 2 Nov 2026
- Prediction Markets guide (Polymarket, Kalshi: back/lay, depth) — Odds-API.io docs, accessed 2 Nov 2026