#交易流动性 What makes trading liquidity so important?

Liquidity is the foundation of a healthy, efficient, and stable market, and it has a profound impact on traders and the market as a whole:

1. **Trade execution efficiency and cost:**

* **High liquidity:** Ensures your trades (whether buying or selling) can be executed quickly and at prices close to what you expect, reducing **slippage** (the difference between the actual execution price and the expected price). Trading costs (including spreads) are lower.

* **Low liquidity:** Large slippage is common, trading costs are higher, and it may even be impossible to complete trades at the expected price.

2. **Price discovery and stability:**

* **High liquidity:** The market has a large amount of trading activity, allowing for more complete competition between buyers and sellers, which helps form a fairer and more accurate market price that reflects the fair value of assets. Price fluctuations are relatively stable.

* **Low liquidity:** Even small transactions can lead to significant price volatility, price discovery is inefficient, and it is easy for large players to manipulate.

3. **Market attractiveness:**

* **High liquidity:** Attracts more traders and investors to participate because they know they can enter and exit the market at any time, reducing investment risks and uncertainties. This, in turn, further enhances liquidity, creating a positive feedback loop.