#Liquidity101

Liquidity in financial markets refers to the ability to quickly buy or sell assets at reasonable prices. It reflects how easily assets can be converted into cash without significantly affecting the price. High liquidity is characterized by ease of trading, while low liquidity is marked by difficulty in trading and significant impact on prices. Factors affecting liquidity include trading volume, number of participants, and market stability. Liquidity is essential for facilitating trading and reducing risks, and by understanding it, traders can enhance their strategies.