#OrderTypes101 What does "liquidity" mean in the trading world?

Liquidity refers to how easily a financial asset can be bought or sold without causing a significant change in its price.

🟢 High liquidity means:

High activity in the market

Abundance of buy and sell orders

Narrow spreads

Quick order execution without noticeable slippage

📌 Example: The BTC/USDT pair on Binance is considered one of the most liquid pairs

🔴 Low liquidity means:

Difficulty in executing large orders

Noticeable price fluctuations when buying or selling

Wide spreads

📌 Example: New cryptocurrencies or small projects on decentralized exchanges (DEX)

💼 Why is liquidity important?

✅ Facilitates quick order execution

✅ Reduces the intensity of price fluctuations

✅ Improves the overall trading experience

❌ In low liquidity markets: you may be able to enter, but exiting may be difficult or costly

📊 Who are liquidity providers?

Market Makers

Liquidity Providers on decentralized platforms

Active traders on centralized platforms

💡 Tip:

Before entering any cryptocurrency or project, always check the trading volume and liquidity.

Investing in a low liquidity market carries high risks.