#Liquidity101 Liquidity is a crucial concept in trading and investing, referring to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means there are many buyers and sellers in the market, allowing trades to happen quickly and at stable prices. Conversely, low liquidity can cause price volatility and difficulty entering or exiting positions. For traders, liquidity impacts the spread-the difference between buying and selling prices-and can influence the success of different strategies. Understanding liquidity helps investors choose the right assets and timing for their trades, improving overall market efficiency.