#Liquidity101

Why Does Liquidity Matter?

Faster Trades:

You can enter and exit positions quickly, especially important in scalping and day trading.

Price Stability:

In a liquid market, large trades don’t cause wild price swings. In illiquid markets, even small trades can cause big moves.

Better Pricing:

High liquidity means tighter bid-ask spreads, so you get fairer prices when buying or selling.

Lower Slippage:

When placing market orders in a liquid market, you get executed closer to your intended price. In an illiquid one, your order may fill at worse levels.

Safer Trading Environment:

High liquidity generally attracts more traders and bigger institutions, making the market healthier and less vulnerable to manipulation.