#Liquidity101

Liquidity measures how quickly and easily an asset can be bought or sold without significantly changing its price. High liquidity means there are many buyers and sellers, allowing fast trades with minimal price impact—ideal for smooth and efficient trading. Low liquidity can cause delays, price slippage, and wider spreads. Factors like trading volume, asset popularity, and market conditions influence liquidity. Highly liquid assets, such as major cryptocurrencies or popular stocks, offer better pricing and lower risk when entering or exiting trades. Always consider an asset’s liquidity before trading to ensure effective execution and minimize unexpected costs.