#Liquidity101

*Liquidity 101:*

*What is Liquidity?*

Liquidity refers to how easily an asset can be bought or sold without affecting its price.

*Key Points:*

1. *High Liquidity:* Assets can be quickly bought/sold with minimal price impact (e.g., major currencies, large-cap stocks).

2. *Low Liquidity:* Assets may take time to buy/sell, or significantly impact prices (e.g., small-cap stocks, certain cryptocurrencies).

*Why is Liquidity Important?*

1. *Price Stability:* Liquid markets tend to have more stable prices.

2. *Trading Ease:* Easy to enter/exit positions.

3. *Risk Management:* Important for managing risk, especially during market volatility.