Ferrofluid is a liquid that reacts to magnetism. It is attracted by magnets, pretty similar to iron. This can lead to areas where the liquid partly resists to gravitation when a magnet approaches. Thereby a small bump is formed close to the loadstone. This behavior is enabled by magnetic nano-particles that are suspended in a carrier fluid. Normally the particles are coated with a surfactant to prevent their agglomeration. This results in stable ferrofluid dispersions.