#Liquidity101 What is liquidity?
It is the ease with which an asset can be bought or sold in the market without significantly affecting its price.
A market with high liquidity is one where buyers and sellers are willing to trade to keep prices stable.
The lack of liquidity is associated with higher risk.
The way to manage liquidity risk is through the use of guaranteed stops. A type of stop loss that guarantees the closure of your position at the selected price level. The problem with using these stops is the payment of a small commission.
The most important thing to remember is that liquidity is not fixed, but operates based on dynamics from high to low liquidity.
