#Liquidity101

Liquidity refers to how easily an asset can be bought or sold without affecting its price. High liquidity means:

1. *Tighter bid-ask spreads*: Prices are more stable.

2. *Faster execution*: Trades are completed quickly.

Low liquidity can lead to:

1. *Volatility*: Prices fluctuate wildly.

2. *Slippage*: Trades are executed at unfavorable prices.

Understanding liquidity is crucial for traders and investors, as it impacts market efficiency and trading costs. Stay informed to navigate markets effectively!