#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without affecting its price. High liquidity means there are many buyers and sellers, allowing for faster trades and smaller price differences. This is common in major markets like Bitcoin or stocks like Apple. Low liquidity leads to slippage, where orders fill at worse prices than expected. It’s riskier and often found in smaller or new assets. Liquidity also affects volatility and trading strategy. Traders prefer high-liquidity assets for smoother execution. Always consider liquidity before entering a trade—it’s crucial for managing risk and ensuring efficient, cost-effective transactions.