#Liquidity101 Liquidity refers to how easily an asset can be bought or sold without affecting its price. High liquidity means many buyers and sellers, tight bid-ask spreads, and quick trades—common in major stocks or currencies. Low liquidity leads to wider spreads, price slippage, and difficulty entering or exiting positions—often seen in small-cap stocks or niche assets. Liquidity impacts execution, volatility, and risk. Traders favor liquid markets for better efficiency and lower costs. Always consider liquidity before trading—what looks profitable on paper might not translate in practice if you can’t move in or out easily. Liquidity matters—trade wisely.