#Liquidity101

"Liquidity" in finance refers to how easily an asset can be converted into cash without affecting its market value. In trading, high liquidity means there are many buyers and sellers, allowing quick transactions at stable prices with minimal "slippage" (difference between expected and actual price). Cash is the most liquid asset. Illiquid assets, like real estate, take longer to sell and may require price concessions. Understanding liquidity is crucial for risk management and efficient trading.