What is ETF liquidity?

ETF liquidity reflects how easily you can buy or sell without significantly affecting price. Key signals include trading volume and the bid-ask spread.

But ETF liquidity also depends on the underlying holdings. Even if the ETF itself doesn't trade heavily, it can sometimes still be liquid if the underlying assets are liquid and market makers can hedge efficiently.

For practical trading, the spread is often the most immediate clue. Tight spreads usually indicate better liquidity. If spreads are wide, consider limit orders and trading during the most active hours.