#Liquidity101 Liquidity refers to how easily an asset can be bought or sold in a market without significantly affecting its price. High liquidity means tight bid-ask spreads and large trading volumes, enabling quick trades with minimal price impact, as seen in major stocks or forex pairs. Low liquidity, common in niche assets, leads to wider spreads and price volatility. Liquidity impacts trading costs and execution speed. Markets rely on liquidity providers, like market makers, to ensure smooth transactions. Understanding liquidity helps traders assess risk, optimize strategies, and avoid slippage in fast-moving or illiquid markets. (90 words)