#Liquidity101

Liquidity refers to the ability to buy or sell assets quickly and at a stable price. Key aspects:

1. *Market Depth*: The volume of buy and sell orders.

2. *Trading Volume*: The amount of assets traded.

3. *Bid-Ask Spread*: The difference between buy and sell prices.

High liquidity:

- Tighter bid-ask spreads

- Faster execution

- Less price volatility

Low liquidity:

- Wider bid-ask spreads

- Slower execution

- Greater price volatility

Understanding liquidity helps traders and investors make informed decisions.