#Liquidity101 **#Liquidity101**: Liquidity refers to how easily an asset can be bought or sold in a market without significantly affecting its price. High liquidity means tight bid-ask spreads and large trading volumes, enabling quick trades with minimal price impact (e.g., major stocks or Bitcoin on big exchanges). Low liquidity, common in small-cap stocks or niche cryptocurrencies, leads to wider spreads and potential price volatility. Liquidity affects trading costs, execution speed, and market stability. Traders prefer liquid markets for efficiency, while illiquid markets can offer opportunities but carry higher risks. Understanding liquidity is key to effective trading and risk management!