#Liquidity101

Liquidity in trading refers to the ease and speed with which an asset can be bought or sold without significant price fluctuations. Essentially, it measures the number of buyers and sellers available in a market and the ease with which transactions can be made.

Why is liquidity important?

Stable prices:

In markets with high liquidity, prices are more stable and less prone to sharp fluctuations, making operations easier.

Quick execution:

It allows trades to be completed faster, especially in markets with high trading activity.

Lower risk of slippage:

Liquid markets usually have less risk of slippage, meaning that the actual price of the trade is different from the price expected.

Broad market:

Liquid markets typically have a greater variety of participants and greater order depth, making it easier to enter and exit positions. $BTC