#Liquidity101 *Liquidity in Trading:*

Liquidity refers to the ability to buy or sell an asset quickly and at a stable price. High liquidity means many buyers and sellers, tight bid-ask spreads, and minimal price impact. Low liquidity can lead to large price swings and difficulty executing trades.

*Factors Affecting Liquidity:*

- Trading volume

- Market participants

- Order book depth

*Importance:*

- Facilitates smooth trading

- Reduces transaction costs

- Enhances market efficiency

Understanding liquidity helps traders navigate markets effectively, manage risk, and make informed decisions. It's crucial for both short-term traders and long-term investors.