Masking fluid is a liquid, typically Latex, used to block out areas of a watercolour painting while you paint, keeping the original colour of the paper or the previous colour that was painted, until such time it is rubbed away. Whether it is to paint on the masked off area later or for effects like highlights on water.
Coloured Masking Fluids are easier to see against a white back ground while Colourless useful for some coloured backgrounds.
Wax resist sticks allow for a similar effect but aren't removable, great for details like picket fencing or highlights.
