#Liquidity101

Liquidity in Trading

Liquidity is the market's ability to absorb large transactions without a significant impact on prices. Here are some key points about liquidity:

- Definition of liquidity:

It is the market's ability to buy or sell assets quickly and at fair prices.

- Importance of liquidity:

It reduces trading risks and makes it easier to enter and exit trades.

- Factors affecting liquidity:

Trading volume, number of market participants, and market depth.

- Types of liquidity:

High liquidity, low liquidity, and insufficient liquidity.

- Impact of liquidity on trading:

It affects the speed of order execution and their prices.

Liquidity plays an important role in determining the success of a trading strategy.