#Liquidity101

Why is liquidity important?

Faster transactions:

You can quickly enter and exit positions, which is especially important for scalping and day trading.

Price stability:

In a liquid market, large trades do not cause sharp price fluctuations. In illiquid markets, even small trades can cause significant movements.

Better prices:

High liquidity means tighter spreads between buy and sell, so you get fairer prices when buying or selling.

Less slippage:

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

Safer trading environment:

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