#交易流动性 What makes trading liquidity so important?

Liquidity is the foundation of a healthy, efficient, and stable market, and it has a profound impact on traders and the entire market:

1. **Trading Execution Efficiency and Cost:**

* **High Liquidity:** Ensures your trades (whether buying or selling) can be executed quickly and at prices close to your expectations, reducing **slippage** (the difference between the actual execution price and the expected price). Trading costs (including spreads) are lower.

* **Low Liquidity:** Large slippage is common, trading costs are higher, and it may even be impossible to complete trades at expected prices.

2. **Price Discovery and Stability:**

* **High Liquidity:** There is a large volume of trading activity in the market, allowing for better competition between buyers and sellers, which helps form a fairer and more accurate market price that reflects the fair value of assets. Price fluctuations are relatively stable.

* **Low Liquidity:** Even small transactions can lead to severe price fluctuations, resulting in inefficient price discovery, and can be easily manipulated by large players.

3. **Market Attractiveness:**

* **High Liquidity:** Attracts more traders and investors to participate, as they know they can enter and exit the market at any time, reducing investment risks and uncertainties. This, in turn, further enhances liquidity, creating a positive feedback loop.