#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 executed.

Why is liquidity important?

Stable prices:

In highly liquid markets, prices are more stable and less prone to sharp fluctuations, making trading easier.

Quick execution:

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

Lower slippage risk:

Liquid markets usually have less risk of slippage, meaning the actual execution price of the trade differs from the expected price.

Broad market:

Liquid markets typically have a greater variety of participants and a deeper order book, facilitating entry and exit from positions. $BTC