#Liquidity101 💧 What is Liquidity in Trading and why does it matter so much?
When we talk about trading on Binance or any other exchange, liquidity is a key factor that many beginners overlook. But understanding it can make the difference between a successful trade and an unnecessary loss.
🔍 Liquidity is the ease with which you can buy or sell an asset without significantly affecting its price. In short, if there is high liquidity, there are many active buyers and sellers, which allows orders to be executed quickly and at fair prices.
💡 Example: Bitcoin has high liquidity on Binance, which is why you can enter or exit the market with little slippage. On the other hand, small or lesser-known tokens often have low liquidity, which can lead to sharp price movements and unfavorable executions.
📊 A good practice is to always check the volume and the spread (the difference between the buying and selling price) before trading.
👉 Do you already consider liquidity in your trades? Share your experience below.
