#Liquidity101 Liquidity is the ability to buy or sell an asset quickly without significantly affecting the market price. In financial markets, liquidity is very important as it reflects the ease of converting assets into cash.

High liquidity assets such as cash, large stocks, or popular cryptocurrencies usually have high trading volumes, low bid-ask spreads, and easy transactions. In contrast, low liquidity assets are difficult to trade, and prices can fluctuate significantly with large orders.

For traders, liquidity directly impacts the ability to enter/exit trades effectively and manage risk. Exchanges with high liquidity also help users execute orders more quickly and stably. Therefore, assessing liquidity is a crucial factor in any investment strategy.