#Liquidity101 #Liquidity101

What is Liquidity

Liquidity is the ease of buying or selling an asset without affecting its price

High liquidity means quick transactions with minimal difference between buy and sell prices

Importance of Liquidity

Faster order execution

Lower slippage difference between expected and executed price

Tighter spreads lower trading cost

Low liquidity can cause unexpected losses

Factors Affecting Liquidity

Trading volume the higher the volume, the greater the liquidity

Number of participants more buyers/sellers better liquidity

Depth of the order book large orders available close to the current price