#Liquidity101 Liquidity in Trading

Liquidity refers to the ability to buy or sell an asset quickly and at a stable price. High liquidity means:

1. *Tight bid-ask spreads*: Small price differences between buy and sell orders.

2. *Fast execution*: Orders are filled quickly.

3. *Stable prices*: Large trades don't significantly impact prices.

Importance

Liquidity is crucial for:

1. *Market efficiency*

2. *Reducing trading costs*

3. *Increasing investor confidence*