#Liquidity101 Liquidity is not just the availability of cash; it is the ability to quickly convert assets into cash without significant impact on the price. Think of it as the lifeblood of any market. High liquidity means smooth trading, fair prices, and easy entry or exit. Low liquidity? Prepare for slippage, wide spreads between buy and sell prices, and potential losses. Understanding liquidity is critically important for successful investing, regardless of your asset class.