#Liquidity101

Liquidity in financial markets refers to the ability to buy or sell assets quickly and at reasonable prices. It indicates how easily assets can be converted to cash without significantly affecting the price. High liquidity is characterized by ease of trading, while low liquidity is marked by difficulty in trading and a significant impact on prices. Factors affecting liquidity include trading volume, the number of participants, and market stability. Liquidity is important for facilitating trading and reducing risks, and by understanding it, traders can enhance their strategies.