#Liquidity101

💧What is Liquidity & Why Does It Matter?

Liquidity isn’t just a buzzword—it’s the lifeblood of any financial market.

🔹 Liquidity = How easily you can buy or sell an asset without affecting its price too much.

Let’s break it down:

✅ High Liquidity: Easy to enter/exit trades, tight bid-ask spreads, low volatility. (Think: major stocks like Apple or currencies like USD/EUR.)

⚠️ Low Liquidity: Harder to buy/sell quickly, wider spreads, more price swings. (Think: penny stocks or rare NFTs.)

💡Why it matters:

Traders want smooth, fast execution.

Investors want stability and fair pricing.

Markets need it to function efficiently.

Next time you hear “this market lacks liquidity