#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without significantly affecting its price. High liquidity means:

1. Easy to buy or sell

2. Tight bid-ask spreads

3. Minimal price impact

Low liquidity can lead to:

1. Large price swings

2. Difficulty executing trades

3. Higher trading costs

Understanding liquidity helps traders and investors make informed decisions, manage risk, and navigate markets effectively. It's essential for market stability and efficient trading. Liquidity varies across assets and markets, so it's crucial to consider it when trading or investing.