Liquidity is one of the most important yet least understood factors in trading. In simple terms, liquidity refers to how easy and quick you can buy or sell an asset without significantly affecting its price. Markets with high liquidity, such as BTC or ETH, have many buy and sell orders, which facilitates trading. In contrast, assets with low liquidity can have large price fluctuations with little activity. This can pose significant risks for traders, especially in new or lesser-known cryptocurrencies. It is always key to analyze liquidity before investing.
