#Liquidity101

**Liquidity101** explains the ease of buying or selling an asset without significantly affecting its price. High liquidity means fast transactions at stable prices (e.g., major stocks or forex pairs), while low liquidity leads to wider spreads and slippage (e.g., small-cap stocks or exotic assets). Key factors include trading volume, bid-ask spreads, and market depth. Liquidity is crucial for traders—ensuring efficient execution, lower costs, and reduced risk. It’s provided by market makers, institutional investors, and high-frequency traders. Understanding liquidity helps investors choose suitable assets, time entries/exits, and manage risk in volatile or illiquid markets.