#Liquidity101
📊 What is Liquidity (Liquidity 101)? And how does it affect your trading? 💧
Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. The more liquidity there is, the more efficient and less volatile the market is.
Why is liquidity important?
✅ Tight spreads (lower trading costs)
✅ Faster order execution (especially for large orders)
✅ Less volatility (protection from sudden movements)
Examples of highly liquid assets:
- Major stocks like Apple and Amazon
- Currency pairs like EUR/USD
- Bitcoin and Ethereum
Risks of low liquidity assets:
❌ Difficulty selling at the desired price
❌ Wide spreads
❌ Market manipulation risks
💡 Tip: Focus on highly liquid assets if you are a beginner or prefer more stable trading!
